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Garments exporters seek sops to tide through liquidity crunch

Amiti Sen New Delhi | Updated on April 17, 2018

March 2018 saw a fall in exports of readymade garments   -  Reuters

India’s exports fall while global demand is on the rise

Garments exporters are looking at the government for some succour to check the continuous decline in exports over the last few months.

Exporters say the fall is mostly due to the liquidity crunch faced by units following the implementation of the Goods and Services Tax (GST) last year which worsened over the months due to inadequate steps taken by policy-makers to address the problems.

“Apparel exporting units are woefully short of cash and many can’t take new orders. A sharp reduction in reimbursements under the duty drawback scheme and Remission of State Levies (RoSL) scheme after the implementation of GST has hit apparel exporters.

“So has the 5 per cent GST that they are made to pay and which is not getting refunded properly,” pointed out A Sakthivel, a Tirupur-based garments exports who heads a number of export bodies.

Because of the reduction in duty drawback rates and the RoSL rates, there has been a net decline of receipts by exporters up to 5.5 per cent of export value, despite the fact that the government had increased the reimbursement rate under the Merchandise Export Incentive Scheme scheme for garments by 2 per cent, pointed out Anil Peshawari from Meenu Creation in NOIDA.

The decline in exports from India is taking place despite robust demand in the global market, points out HKL Magu, Chairman, Apparel Export Promotion Council (AEPC). “The global demand positions are good and the industry is keen to take up more orders but cost disadvantages are affecting India's relative position as a sourcing destination," Magu said.

Shipments decline

AEPC, in a statement earlier this week, pointed out that garments exports had entered a “recessionary zone’’ with shipments in March 2018 falling 17.78 per cent to $1.49 billion and an overall dip of 3.83 per cent to $16.71 billion in 2017-18. Exporters bodies, including the AEPC and the FIEO, have been approaching the government for relief in some form to help them tide over the problems being faced due to GST implementation.

“We are in touch with the Ministers of Textiles and Commerce. Both are sympathetic and understand our problems and hopefully some kind of a scheme to reimburse us of the disadvantage of 5 per cent that we are suffering will be announced soon,” Sakthivel said. He added that in the absence of a response from the government, things would only get worse for India and the competitors from countries such as Bangladesh, Vietnam and Cambodia will take away India’s business.

India’s overall goods exports increased 9.78 per cent to $302.4 billion in April-March 2017-18, but declined 0.6 per cent to $29.11 billion in March 2018.

The fall in exports has been much more in case of India’s apparel exports.

The sector presently employs 12.9 million workers but due to the ongoing slide, several clusters have been impacted.

Published on April 17, 2018

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