The Hindu Business Line : Garment exporters seek level playing field

THE end of the quota regime in world trade in textiles and clothing notwithstanding, Indian apparel exporters have not been the major beneficiaries of free trade in textiles and clothing with various domestic constraints hobbling them from making a quantum jump in the markets overseas.

This was highlighted here on Wednesday at a meeting between the Union Textile Secretary, Mr R. Poornalingam, and the representatives of the Apparel Export Promotion Council (AEPC) led by the Council's Chairman, Mr A. Sakthivel. Later, talking to Business Line here, Mr Sakthivel said that domestic apparel manufacturers have brought to light the multiple disabilities under which they operate in the fiercely competitive global market in textiles and clothing and pleaded for a level-playing field. First, he said, is the problem of ownership of `export' itself with exports being the subject of the Central Government, while the exporters work in the State environment. There is virtually `nil' fillip for State governments to promote exports, and this lack of ownership by the States make them resort to a raft of levies on products, which remain un-refunded. This broader issue needs to be resolved before long, as exporters are getting penalised for no fault of theirs, he said.

Second, apparel exporters are at a disadvantage vis-à-vis other competitors. Countries such as Bangladesh enjoy duty-free entry in a large number of markets giving an advantage of 10 to 23 per cent. Countries such as China have a number of in-built subsidies, which if put in an ad valorem basis, might work out to be around 20 per cent. The advantage only on account of the fixed dollar vis-à-vis the Chinese currency is more than 10 per cent. Unfortunately, India has not taken up this issue at the international fora, he said, adding that it would be next to impossible for any apparel exporter to compete with such disadvantages.

Third, the drawback/ duty entitlement passbook (DEPB) rates are definitely lower than those in other markets. The drawback rate in China is 15 per cent, while the import tariff and inland tariff are much lower. The drawback/DEPB rates, which are direct assistance to the exporters, have further compounded the problems because of the lower caps, which in a way consign the exporters to keep unit value realisation low. The Textile Ministry should help the industry in resolving this issue, as in the post-January 2005 situation, there is no incentive for exporters to inflate export prices, especially for exporting to Canada, the US and the European Union where the import tariffs remain very high.

Stating that the need of the hour is to bring an all-encompassing labour legislation for the apparel-manufacturing sector, he said that in the present conditions, this might be difficult. Yet, Mr Poornalingam has taken up the work of amendments in labour laws in right earnest. Mr Sakthivel said that the garment industry would be glad if the Secretary (Textiles) gets those amendments to which he agreed as Additional Secretary in the Cabinet Secretariat or which he has already got approved from the Committee of Secretaries.

The demand for an Apparel Research and Development Centre for product diversification, development, quality and productivity research, evolving standards and a packing methodology is also favourably met by the Secretary, he said.

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