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India’s garment export woes are self-inflicted: report

India’s garment export woes are self-inflicted: report

Posted on July 21, 2024 By admin


India’s garment exports in 2023-24 stood at $14.5 billion, compared with $15 billion in 2013-14. Image for representation purposes only. File
| Photo Credit: M. Periasamy

Exports from India’s labour-intensive garment sector, which have been losing ground to rivals like Vietnam and Bangladesh and were lower than 2013-14 levels last year, have been dented more by the country’s high duties and barriers on raw material imports along with difficult customs and trade procedures, rather than other nations’ competitive strengths, a research report has flagged.

India’s garment exports in 2023-24 stood at $14.5 billion, compared with $15 billion in 2013-14. Between 2013 and 2023, garment exports from Vietnam has grown nearly 82% to hit $33.4 billion while that of Bangladesh has grown nearly 70% to hit $43.8 billion. China exported about $114 billion of garments in the same year, nearly a quarter lower than a decade earlier.

A Production Linked Incentive (PLI) scheme for textiles launched by the Centre in 2021 has failed to gain traction with investors and needs significant modifications to be effective, the think tank Global Trade Research Initiative (GTRI) has noted in a report titled, “How Complex Procedures, Import Restrictions and Domestic Interests Hinder India’s Garments Exports”.

The report has also raised concerns about a steady rise in India’s garments and textiles imports in recent years, which had grown to almost $9.2 billion in calendar year 2023. It warned that this tally could rise faster if the export slide isn’t arrested, especially with firms like Reliance Retail expected to kick off sales of Chinese brands like Shein in the country.

Also Read | Growth hat-trick for goods exports; but trade deficit up 9.4% in June

“Complex procedures, import restrictions and domestic vested interests are holding up Indian garment export growth. At the root of the exporters’ problem is difficulty in obtaining quality raw fabric particularly synthetic fabric,” the GTRI report said, adding that Bangladesh and Vietnam do not suffer from these complexities, while Indian firms have to “waste time and money” on them.

The report, based on interactions with small, medium-sized, and large garment exporters, pointed out that recent Quality Control Orders or QCOs issued for fabric imports have complicated the process of bringing in essential raw material. This is pushing up costs for exporters who have to rely on pricier options from domestic firms who dominate the market for raw materials like Polyester Staple Fibre and Viscose Staple Fibre.

“This scenario forces exporters to use expensive domestic supplies, making Indian garments overpriced and unappealing to global buyers who prefer specific fabric sources,” it explained. Moreover, the procedures laid down by the Directorate General of Foreign Trade and Customs are archaic, requiring exporters to meticulously account for every square centimetre of imported fabric, buttons, and zippers, ensuring these are used in the production process and reflected in export product description, the report said, mooting a comprehensive overhaul to change the status quo.



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