Though the Central Budget for 2012-13 has raised excise duty on
branded garments from 10 to 12 per cent, the apparel industry seems to
have hailed the Finance Minister’s proposal to lower the incidence of
duty as a percentage of the retail price from 4.5 per cent to 3.6 per
cent with an increase effected in the abatement to 70 per cent from
the existing 55 per cent. However, what has really unnerved the
industry is that the textile package offered by the Budget has
addressed only the handloom and powerloom sectors and is absolutely
silent on issues like credit availability at concessional rates and
its failure to meet the major demands of garment exporters. There is
growing concern over deceleration in growth in overall exports,
including textiles. After registering a high growth of 61 per cent in
July 2011, exports started slowing down and the growth was almost
negative in December. Of course, the overall export performance of
different sectors was most encouraging during April-December, with the
growth in cotton fabrics and readymade garments at 13 per cent and 23
per cent respectively.
However, with persistent global economic uncertainties, it is
well-nigh impossible to predict the fortunes of textile exporters.
Tougher competition from Asian rivals like China, Pakistan and
Bangladesh would prevent India from attaining the textile export
target of $33 billion for 2012-13 against $28 billion for 2011-12.
Further, the EU and the US, which together meet almost 60 per cent of
their textile import needs from India, have started preferring
products from suppliers from the neighbouring countries. The possible
loss of Western markets would render it absolutely essential for
Indian textile exporters to tap the hitherto unexplored markets in
Asia and Africa more vigorously.
Another setback to textile exporters is the latest WTO projection of a
further slowdown in world trade in 2012 to 3.7 per cent from the
actual expansion of five per cent registered in 2011. More than three
years have passed since the global trade collapse of 2008-09. Still
the world economy and trade remain fragile, and the sluggish phase of
recovery has raised concerns that restrictive trade measures by
individual countries would gradually undermine the benefits of trade
openness. Hence the need for all WTO members to revitalise the trade
system in order to strengthen the world economy. Indian exporters,
particularly of textiles, have to necessarily refashion their trade
strategy in the emerging competitive environment so as to remain
afloat.