Exports of textiles and clothing decline
Textiles and apparel exports contracted 8.5% in the first half of FY23 from a year earlier, well below the 17.8% rise in overall merchandise exports .
According to the latest data from the Ministry of Commerce, textile and apparel exports amounted to $18.3 billion in H1FY23, up from $20 billion a year earlier. Slowing demand in key markets, in addition to a shortage of cotton, led to a decline in such exports, exporters said.
Worse still, the share of textile and apparel shipments in the country’s goods exports has steadily declined over the past decade and a half and stood at just 7.8% until September this fiscal year. ; the share was 13.7% in FY16. This suggests a steady erosion of export competitiveness, despite government efforts to redress the situation of the largest labor-intensive sector after agriculture, and brings to the fore concerns about job creations. jobs in the country.
As the country’s two main textile and apparel export markets – the United States and the EU – experience slowing demand, shipments of these products will remain under pressure. Unless corrective action is taken soon, the ambitious goal of achieving annual textile and apparel exports of $100 billion in five years will not be achieved.
More importantly, the historical political bias in favor of the cotton-based value chain when the global consumption model shifts towards synthetic fibers and technical textile products, the dominance of small and medium-sized limited-scale enterprises, inflexible work rules for decades and high logistics costs have undermined this situation. sector. Consequently, India has ceded a large share of the export market to Bangladesh and Vietnam over the past decade.
To address some of these issues, the government in 2016 came up with a Rs 6,600 crore package for garment exporters. It also allowed fixed-term employment to solve the problem of seasonal order flow. However, the relief bore little fruit as other structural bottlenecks continued to persist.
To address these issues, the government has announced a production-linked incentive scheme of Rs 10,683 crore for technical textile and synthetic fiber products only, and has selected eligible companies this year. Since the incentive levies should now be lower, he plans to roll out a second PLI program for the sector. According to government officials, this will produce medium-term results.