The apparel industry expects the recently signed Comprehensive Economic Partnership Agreement (CEPA) with Japan to push up exports to that country by at least 50 per cent from the current $125 million per annum. India has signed one of its largest ever agreements with Japan, which has a GDP (Gross Domestic Product) of $5 trillion.

According to the agreement, about 94 per cent of the tariffs between Japan and India will be eliminated within 10 years (about 97 per cent by Japan and about 90 per cent by India on trade value basis).

Mr Premal Udani, Chairman, Apparel Export Promotion Council (AEPC), said with this agreement all garment items falling under chapter 61 and 62 (knit and woven garments) have become duty free with immediate effect thus eliminating the effective duty of 11 per cent.

India, which ranks among the top five suppliers to Japan, exports knitted and woven garments in equal proportion.

Mr Rahul Mehta, President, Clothing Manufacturers Association of India, said the Council will showcase the potential of Indian exporters at the International Fashion Fair to be organised in Tokyo between July 20 and 22.

In anticipation of the agreement, the Council had arranged for an extensive meeting with major buyers including Fast Retailing, who has over 700 stores. Besides, in the recently concluded Tex-Trends India-2011, about 98 Japanese buyers visited the show, he said.

YARN PRICES ZOOM

Despite high yarn prices, AEPC expects to achieve the export target of $11 billion this financial year. It has forecast about 10 per cent growth, subject to raw material stability. After the much required stability in December, cotton yarn prices have gone up by Rs 50 a kg since January due to high cotton prices.

Mr Udani said, in last one-and-a-half months cotton prices have increased to Rs 60,000 a candy from Rs 45,000, while yarn prices have jumped nearly 45 per cent.

The industry which employs about six million people, the largest after agriculture, has seen worst of its time when it started facing shortage of cotton yarn – the basic raw material for apparel manufacturing.

To further augment the crisis, the Madras High Court recently ordered closure of all dying units in Tirupur, the hub of apparel manufacturing.

“While we respect the Court's decision, it is a fact that the industry has lost its reputation with foreign buyers as all pending contracts are severely delayed. On the back of these developments, many of the industry players have been forced to shut down their operations rendering thousands of labour jobless,” he said.

Related Topics
comment COMMENT NOW