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India’s Declining Garment Export Performance
Context:
According to a report by the Global Trade Research Initiative (GTRI), garment exports declined to $14.5 billion in the fiscal year 2023-24, a decrease from $15 billion in the fiscal year 2013-14, indicating a stagnation in export levels over the past decade.
More on News:
- India’s share in global garment trade declined. Knitted apparel fell from 3.85% to 3.10% and non-knitted apparel from 4.6% to 3.7% between 2015 and 2022.
- This decline underscores the urgent need for reforms to enhance competitiveness.
- Report highlights a surge in garment imports to $9.2 bn in 2023, indicating increased dependence on foreign products due to declining domestic capabilities.
Factors Contributing to Decline:
- Import Barriers: High duties and restrictions on raw material imports, particularly synthetic fabrics, have increased costs.
- For example, Directorate General of Foreign Trade’s (DGFT) import policy circular of 2001 requires all imports of textiles be accompanied by a Pre-shipment Inspection Certificate (PSIC) issued by a Textile Testing Laboratory accredited to the National Accreditation Agency of the supplier country.
- Trade Procedures: Complex customs and trade procedures have added to the cost and complexity for Indian exporters.
- Quality Control Orders: New regulations for fabric imports have further complicated and increased the costs for obtaining raw materials.
- Geopolitical Tensions influenced the global economy and consumer confidence, impacting textile exports.
- The Red Sea Crisis increased sea freight costs by 100% and air freight costs by up to 200%.
Comparative Analysis With Other Countries:
- Vietnam: Exported garments worth $33.4 billion in 2023, an 82% increase from 2013.
- Bangladesh: Exported garments worth $43.8 billion in 2023, a 70% increase from 2013.
- China: Exported garments worth $114 billion, nearly 25% lower than a decade earlier.
Impact of Decline in Garment Export on the Industry:
- Thousands of small and medium textile enterprises are at risk of shutting down, especially in textile hubs like Tirupur.
- Job losses and reduced incomes for millions of textile workers, especially women, who form the backbone of the industry.
- Lower foreign exchange earnings for the country at a time when the Indian economy is facing headwinds.
Government Measures to Boost Garment Exports:
- Production-Linked Incentive (PLI) Scheme for Man-Made Fibre apparel and fabrics is expected to significantly boost production capabilities in the textile sector.
- Additionally, the establishment of Mega Investment Textiles Parks (PM MITRA) is expected to further enhance these capabilities.
- Programs like Merchandise Exports from India Scheme (MEIS) & Remission of Duties and Taxes on Exported Products (RoDTEP) support exporters.
- Rebate of State and Central Taxes and Levies (RoSCTL) Scheme.
- Technology Upgradation Fund Scheme (ATUFS)
State of India’s Apparel and Garment Industry
- Global Standing: India is a leading garment-manufacturing country with renowned craftsmanship in fibre, yarn, fabric, and apparel.
- India is the sixth largest exporter of textiles and apparel worldwide.
- It accounts for 8.0% of India’s total exports.
- Popular Products: Indian cotton, silk, and denim are highly sought after globally, and Indian apparel enjoys success in fashion hubs worldwide.
- Market Value: Growing at a CAGR of 14.59%, from $172.3 billion in 2022 to an estimated $387.3 billion by 2028.
- Economic Contribution: Contributes 2.3% to GDP (~$70 billion) and is the second largest employer after agriculture, with 45 million direct jobs and 100 million in the allied sector.
- Key Manufacturing States: Andhra Pradesh, Telangana, Haryana, Jharkhand, and Gujarat.