The Hindu Business Line : Readymade exports show buoyant trend

WITH the deadline for the end of the quota regime in global trade in textiles and clothing drawing closer, the country's exports of readymade garments to quota-restricted countries displayed buoyant trends during the first five months of the current fiscal.

They grew by 8.46 per cent in terms of volume and 14.24 per cent in terms of value from April to August, compared to the corresponding months of 2003-04.

Figures compiled by the Apparel Export Promotion Council (AEPC) show that exports of ready made garments (RMGs) to restricted countries during April-August amounted to 506.5 million pieces valued at $2,126 million, spurring optimism about achieving an overall garment export of above $5 billion this fiscal.

However, the AEPC Chairman, Mr A. Sakthivel, told Business Line here that amendments to the duty entitlement passbook (DEPB) rates effected by the Director General of Foreign Trade (DGFT) recently would have an adverse effect on textile exports from India.

Particularly so when competing countries such as China are going the whole hog to make textile exports more competitive to capture the global market after phasing out the quota regime.

Mr Sakthivel sought the continuation of the drawback rates for garment exporters and the reversal of amendments to the DEPB rates on textile goods exported.

Officials in the Textile Ministry said visualising the vast potentials for export in the post-MFA (multi-fibre agreement) phase-out period beginning January 1, 2005, the Indian garment industry had doubled its investment from Rs 500 crore to Rs 1,000 crore in a single year for capacity expansion, modernisation and technological upgradation. However, the industry is sore that fundamental problems such as lack of appreciation from the revenue department in promptly providing drawback and frequent revision in DEPB and drawback rates inject uncertainty into the exporters' calculations.

Industry sources maintain that if the Government's contention that there is no change in the customs duty (which continues to be 20 per cent on polyester staple fibre and viscose staple fibre), with value addition having coming down because of steep increase in prices of petroleum-based raw materials, holds true, then there is a case for maintaining the rates of DEPB, if not increasing it.

They said that a stable policy regime particularly on fiscal matters is important for the industry to put in its best, complemented by the removal of structural constraints such as inadequate infrastructure and high cost of power.

The sources said since the technology of the weaving segment of the Indian textile industry is insufficient compared to other countries, the cost of power as a percentage of total cost of fabric production is also high.

Exports of garments to the US during April-August amounted to 193.9 million pieces valued at $976 million.

This represents an increase of 19.03 per cent in terms of volume and 18.05 per cent in terms of value.

Exports of RMGs to the 25-member European Union during the period under review amounted to 290.3 million pieces valued at $1074.8 million - an increase of 3.38 per cent in volume terms but 12.26 per cent in value terms compared to the corresponding period the previous fiscal.

Exports to Canada during April-August 2004 amounted to 22.3 million pieces valued at $75.2 million, showing a decrease of 4.29 per cent in volume and 1.83 per cent in terms of value compared to April-August 2003.

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