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Monday, May 31, 2004

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Drop in readymade garments exports to US

G. Srinivasan

New Delhi , May 30

EXPORTS of readymade garments (RMGs) from the country registered a modest decline of 0.82 per cent in dollar terms during the first four months of the calendar year as compared to the corresponding months of 2003 by fetching $1,970.1 million on a sale of 498.8 million pieces.

According to figures compiled by the Apparel Export Promotion Council (AEPC) here, exports to the US during January-April 2004 have amounted to 155.4 million pieces valued at $755 million which was a decrease of 2.39 per cent in terms of volume and 6 per cent in terms of value in comparison with the corresponding period of 2003.

The factor behind the fall in the principal market of Indian RMGs is the continuing appreciation of the rupee vis--vis the dollar.

Besides, some least developed countries (LDCs) and other countries have preferential trading arrangements (PTAs) with the US owing to which they get duty-free treatment of import of garments to the US, which affects Indian exports.

Exports to the then 15-member European Union (EU) during the period under review amounted to 322.6 million pieces valued at $1,148.4 million. When compared to the same period of 2003, there has been a modest increase of 1.48 per cent in terms of quantity and 16.83 per cent in terms of value.

What is particularly noteworthy is that in comparison to the same period of the previous year, exports to Portugal, Greece, Finland, Benelux (Belgium, Norway and Luxembourg), Italy, the UK, France, Germany, Ireland, Denmark and Sweden have shown an increase while Austria and Spain have shown a decline in terms of value. Exports of garment to Portugal have displayed the highest increase of 83.33 per cent in terms of value.

Exports to Canada during January-April 2004 have registered a decrease of 19.38 per cent in terms of volume and 14.71 per cent in terms of value when compared to the same period of previous year.

During the period under review exports have amounted to 20.8 million pieces valued at $66.7 million.

Exports of RMGs to quota restricted countries during the inaugural month of the current fiscal, April 2004 has been 99.7 million pieces valued at $380.1 million, against 104.2 million pieces valued at $375.9 million.

This shows a decrease of 4.32 per cent in terms of volume and an increase of 1.12 per cent in terms of value when compared to April 2003.

It is also interesting to note that in the first month of the current fiscal there is a steep increase in value terms both in the US and the EU markets.

Expressing concern over the decline in apparel exports, the AEPC Chairman, Mr A. Sakthivel, told Business Line when contacted that he has already met the Union Commerce & Industry Minister, Mr Kamal Nath, and the Union Textile Minister Mr Shankarsinh Vaghela, and also forwarded a memorandum to the Union Finance Minister, Mr P. Chidambaram, pleading for some export support measures on an emergency basis to stem the apparel industry's fading fortunes so as to bolster it.

Mr Sakthivel said that as $5.5 billion export turnover is at stake, the new Government, wedded to boosting manufacturing sector and value-added exports for promoting employment generation, must go all out to enable garment exports to pick up pace by instituting the requisite incentives.

He said the European Union's offer of additional quota must be accepted as any further delay would result in lapse of the offer to the discomfiture of the garment industry.

Pending issues such as appreciation of the rupee vis--vis dollar, exemption on export profit tax and restoration of DEPB rates on non-reduction of specific duties should be resolved forthwith if the apparel industry is to grow further and contribute to the additionality of foreign exchange as also employment in the country.

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