In view of the divergent views on the performance of India's textiles and garment industry, it was felt that there was a need to clear the air of any misunderstanding on the issue.

At attempt has been made to find out, how the garment export business had moved during the year 2006 and what could be the possible reasons for the declining growth rate as reported by some of the respondents.

Industry and business organisations, by and large, have invariably relied upon secondary data published by the Department of Commercial Intelligence and Statistic of the Ministry of Commerce. As per DGCI&S, exports of garments during the period April September 2006, registered a growth of 9%. Total exports of apparels to US in January-October 2006 were up by 8.67%. In the case of EU, total exports of apparel in January-September 2006 registered a growth of 21%. In the case of Japan, the exports for the period January-September 2006, recorded a growth of 31%.

According to Shri Shankarsinh Vaghela, Textile Minister, there has been a resurgence in the Indian Textile Industry in the post quota period. India is emerging as one of the major outsourcing hubs as it has comparative advantage over its competitors on availability of relatively inexpensive and skilled workforce, design expertise, a large production base of basic raw materials, yarn and fabric and availability of a wide range of textiles. The abolition of quota regime coupled with the visionary schemes and policy measures taken by the UPA Government, the sector which was termed as a sunset sector has now been transformed into a sunrise sector. The industry is instilled with a new sense of optimism and achievements. Higher investments, higher production and higher exports are illustrative of the resurgent mood of the Indian textile industry. There has been an upsurge of investments in textile sector. He also reiterated that the textile industry would continue to grow and play a vital role to create more employment, enhance per capita income of the large workforce employed in the textile and allied industries; thereby ensuring egalitarian and efficient allocation of economic resources.

However, Mr. Vasdev Loond, President, Garments Exporters Association, presented a somewhat alarming picture on the export scenario by stating that exports were dwindling, business has become unstable, prices have crashed, purchase orders are being passed on nearest to the season, margins are decreasing, so on and so forth. His observations that factories were lying closed with workers remaining idle for four months was enough to set the alarm bells ringing.

Mr. Vasdev Loond pointed out that the Garment Exports, which had been achieving very impressive rate of growth during the last few years have recently registered a declining trend causing grave concern to the Industry. Besides, the Government�s inability to change Labour Laws and additional taxes like service tax, fringe benefit tax, interstate taxes, ESI imposition on exporters for contractual work etc. have added to the decline of
export business.

While endorsing similar views, Mr. H.K.L. Magu, Sr. Vice-Chairman, Apparel Export Promotion Council (AEPC), and partner M/s Jyoti Apparels, pointed out that failure of industry to cope with upcoming design trends has led to less than expected export growth during this year. He added that Indian styles are becoming outdated due to fashion trends changing randomly in global markets, which is discouraging buyers. Mr. Magu stressed the need to extend TUFS, which will expire in 2007. He further pointed out that Garment Industry was already suffering from sluggish international market and if immediate steps are not taken to revive the garment exports, the situation would become from bad to worse.

Mr. G.S. Madan, Vice-President, GEA and Proprietor of M/s Madan Trading Co. Pvt. Ltd., expressed similar views that garment exports rate has declined. He pointed out that Indian Garment Industry has good potential to better its performance manifolds if the Government gives special attention to remove the bottlenecks that come in the way of its growth. Rapid modernisation has taken place in garment export Industry in the recent years as a result of which tremendous improvements have been made in quality of fabrics and production of garments.

According to Mr. D.K. Nair, Secretary General, Confederation of Indian Textile Industry, there has been a decline in the growth rate in export of textiles and garments during the last few months compared to the 2nd half of 2005 and the early part of 2006.

However, our current growth rate is substantially higher than the growth we had during the quota era. In European Union, import of textile and clothing from India during January August 2005 had amounted to Euros 3.58 million. As against this, their imports from India during January August 2006 have amounted to Euro 4.24 billion. In USA, total imports of textile and clothing from India during January-November 2005 had amounted to USD 4.26 billion. As against this, their imports during January-November 2006 have amounted to USD 4.65 billion. All the figures given above are as per the records available from the data maintained by importing countries. As per the figures maintained by DGCI&S, our exports of textile and clothing currently have a growth rate of over nearly 13%. If you take garments alone, the growth rate during April - August 2006 compared to the same period of 2005 is about 12%. From all these, it is clear that our textile and garment exports continue to grow at a faster pace now than we have been growing during the quota period.

Mr. A. Sakthivel, President, Tirupur Exporter's Association has pointed out that as far as the Tirupur is concerned the exporters are brimming with full of orders and none is facing dearth of orders. However, the major constrain for Tirupur is the execution of orders in time due to shortage of labour. If we analyse import figures from US customs, it is very much clear that the positive sign is still continuing in most of the items. Tirupur exports to EU is also doing well. As far as the competition is concerned, definitely we could expect a severe competition from China and Bangladesh.

According to Mr. Rahul Mehta, President, CMAI, the year 2006 has been a tumultuous year for the Indian apparel industry, be it export or domestic. Newer players, newer sets of rules, dramatic changes, and major shake outs all these and more made the year one of the most challenging the Industries has witnessed in a long time. The year 07 will witness the same turbulence, perhaps more intensely.

Mr. Pritam Goel, Hony. Gen. Secretary, Garments Exporters Association and partner M/s Lyra Industrials, pointed out that procedural hurdles will have to be removed to boost growth of garment exports. He also expressed concern at the slow down of the economy and present recessionary trends in the international market. He pointed out that garment exports were already suffering on account of continued recession and low unit value realisation from overseas markets. Low Business confidence and lack of proper infrastructural support has also adversely affected the growth of garment exports.

Mr. Goel felt that to promote higher export growth rate the exporters should be encouraged to go ahead with the modernization plans with latest technology by providing them adequate and timely credit at internationally competitive interest rates. He said that both Pre-Shipment and Post-Shipment Credit Schemes should be reviewed and credit should be made available to the exporters on softer terms to enable them to face the global competition. Mr. Goel further stressed the needs to revise labour laws in line with recent economic reforms undertaken by the government to increase labour productivity and attain higher production.

Industry and business organisations, by and large, have invariably relied upon secondary data published by the Department of Commercial Intelligence and Statistic of the Ministry of Commerce. As per DGCI&S, exports of garments during the period April  September 2006, registered a growth of 9%. Total exports of apparels to US in January-October 2006 were up by 8.67%. In the case of EU, total exports of apparel in January-September 2006 registered a growth of 21%. In the case of Japan, the exports for the period January-September 2006, recorded a growth of 31%.

GEA has therefore decided to conduct a detailed survey to find out, how the garment export business had moved during the year 2006 and what could be the possible reasons for the declining growth rate as reported by some of the respondents.

We propose to publish the expectations, the performance, and the problems; you faced during 2006 and also present a vision for the future, in the next issue of the GEA News. Kindly let us have a brief note regarding your assessment of the performance during the year ending 2006, at the earliest.

About the author:

Mr. Surinder Anand, the Executive Secretary of the Garments Exporters Association (GEA) is a post-graduate in Economics from the University of Delhi. He has 37 years of professional experience in industry associations. He is with the GEA since the last 10 years. His articles have been published in leading dailies of Delhi. Mr. Anand had earlier worked with the Indian Newspaper Society, the All-India Manufacturers Organisation (AIMO) the Indian Spinners Association, the Institute of Economic Growth and the Shri Ram Centre for Industrial Relations.

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