India’s apparel exports may dip in FY18 over GST, global challenges

India’s apparel exports may dip in FY18 over GST, global challenges

Ahmedabad, Mar 7: If the 10-month data from April 2017 to January 2018 is anything to go by, India’s apparel industry may post a rare decline in exports for the current fiscal 2017-18, let alone meeting the $20 billion target.
While India may have reported a 6-20 per cent growth in apparel exports to different destinations such as the US, UK, Germany, France and Spain during November-December 2017, overall exports in the sector are down by one per cent for the 10-month period of this year.
Global factors such as free-trade agreements of competing nations with key markets like Europe, the UK and the US had already been posting a challenge to Indian ready-made garments (RMG) exporters. However, post Goods and Services Tax (GST) implementation in July 2017, reduced export incentives coupled with delay in input credit refunds have further accentuated the industry’s woes.
Data shared by industry body Apparel Export Promotion Council (AEPC) shows that India’s RMG export to world in the April-January of 2017-18 was to the tune of $13,783.4 million. down 1.27 per cent compared to the same period of previous financial year. During April-January 2016-17, India’s apparel exports were to the tune of $13,960.2 million.
According to AEPC and rating agency Icra, the decline has been primarily driven by the sharp decline in exports to the UAE market. This has been augmented by dismal global apparel trade which remained subdued at a mere one per cent growth in calendar year 2017, following a decline of two per cent and five per cent in 2016 and 2015, respectively.
As per Icra, particularly for the ten-month period ending June 2017, India’s apparel exports to UAE had grown at a sharp pace of 56 per cent year on year (YoY).