India’s Government has doubled an incentive under its export scheme for garment and made-up businesses with immediate effect, in an attempt to reverse declining exports.
In a statement by India’s Commerce and Industry Ministry late last week, the department said exporters of garments and made-ups will get 4% of their exports’ value back, an increase of two percentage points, in the form of duty exemption scrips, with immediate effect. These can be used to pay duties on inputs, including customs.
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“The estimated annual incentives will be Rs 1,143.15 crore for 2017-18 and Rs 685.89 crore for 2018-19,” it said.
“This measure will incentivise the exports of labour-intensive sectors of readymade garments and made-ups and contribute to employment generation.”
India’s total exports fell 1.12% in October to US$23bn. Within that, garment exports slumped 39.2% for the month to $829.4m following the roll-out of the goods and services tax (GST) in July, which was touted as a major economic reform of Prime Minister Narendra Modi’s Government.
A report from credit rating agency ICRA in October showed India’s textile exports have remained stagnant in the past four fiscal years, after growing at a compound annual growth rate (CAGR) of around 13% between FY2010 and FY2014 in US dollar terms, driven by apparel, home textiles and cotton yarns.
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By GlobalDataICRA put the slowdown in the apparel sector down to subdued demand in the key consuming regions of the US and the European Union (EU). Cotton yarn exports have also been under pressure, and the recent revision in duty drawback rates has added to this pressure. The industry has also faced intense competitive pressures from other leading textile exporting nations such as Vietnam and Bangladesh.
Pressure on Indian textiles exporters set to ease
