Continuing recession in the global markets is taking a toll on the country’s garment exports with the latest figures revealing a 15.4 per cent decline in the first quarter of the current fiscal year.
Data for April to June 2009 released today by the Apparel Export Promotion Council (AEPC) show the country exported clothes worth $2.41 billion against $2.85 billion in the same period last year.
The downturn was more pronounced in export of silk garments, which tumbled 29.31 per cent to $82 million in the first quarter of the current fiscal from $116 million in the first quarter of last fiscal.
It was followed by a 27.2 per cent fall in exports of clothes made from manmade fibres, which totalled $190 million compared with $261 million in April-June 2008. Exports of cotton garments slipped 14.13 per cent to $1.86 billion ($2.17 billion), while woollen garments tumbled 7 per cent to $93 million ($110 million).
Apparel made from other textiles saw a decline of 5.5 per cent to $189 million in April to June this year ($200 million).
“Thus the erosion was spread across all categories,” said the AEPC Chairman, Mr Rakesh Vaid.
In 2008-09, apparel exports out of India were 14 per cent short of the $11.62-billion target and ended up at $10.17 billion — barely 4 per cent above the $9.68-billion in the previous year.
Slowdown
The slowdown in garment exports from India started in the mid-2008 when retail orders from advanced economies in North America and Europe began to feel the pinch of the most devastating economic meltdown worldwide, causing widespread unemployment and altering consumer spending behaviour.
Many economists predict that recovery will be agonisingly slow.
In the $373-billion global clothing industry, India’s share, over the years, has fallen from 3.3 per cent to 2.6 per cent.
Even to retain the extant share of 2.6 per cent, India needs to export $18 billion worth of clothes annually, which will require 2.7 million additional manpower and investments of $30 billion.
The unit value realisations have also contracted. For example, realisations for garments to the US fell from $3.6 a piece in 2007 to $3.4 in 2008 and to $3.3 this year.
On the other hand, India’s cost disability of about 20 per cent has resulted in smaller economies such as Bangladesh surpassing by huge margins. The AEPC has thus called for a slew of measures to be part of the forthcoming foreign trade policy.
Slew of measures
They include, among others duty-free scrips, which are currently worth two per cent of the export values for the US and the European Union, be increased to five per cent, inclusion of apparel in the focus product scheme, duty-free of import of capital goods and specialised fibres, yarns and fabrics not produced within the country and trimmings and embellishments.
The facility of permitting import of consumable spares at concessional rate of five per cent flat Customs duty should be restored, the AEPC said.
Source : Business Line