By: Shramana Ganguly Mehta


After losing close to 5 lakh skilled workforce to the globaleconomic downturn, the Indian apparel export sector is hoping that finance minister Pranab Mukherjee will attempt revivalthrough the forthcoming budget.


In a pre-budget meeting with the Union finance minister onTuesday, AEPC chairman Rakesh Vaid sought separate budget for product development and 50% capital subsidy for garmentmachines, among a slew of fiscal measures to enable it to grow from current $10billion to $18 billion by 2015 to maintain its 2.6% share in the estimated $692-billionglobal apparel trade market.


For achieving $18-billion export target by 2015, the sectorwould need investment of Rs. 1,43,000 crore, additional sewing machineryinstallation by 18.44 lakh and 27 lakh new jobs, Mr Vaid said in hisrepresentation.


"While as a short-term measure, the government shouldincrease the drawback at the rate of 14.61% on fob value of exports fromSeptember 2008 from the current level of 8%, long term recommendations includebudgetary allocation for product development, 50% capital subsidy for garmentmachines, greater funds for TUF, additional interest subvention of 4% toapparel industry, moratorium of two years for repayment of principal amountagainst term loan, financial support for undertakingresearch and development activities, among others," he stated.


Indiaexports around 250 crore pieces of garments annually, majority of which caterto the US and EU markets. With the consumers tightening their purse stringssince mid-2008, Indian exports fell 14% short of $11.62 billion target for2008-09, leaving apparel export clusters across Gurgaon, Okhla, Noida andTirupur with poor order books, thereby forcing retrenchment of more than 5 lakhworkers during September 2008-March 2009.


Owing to inherent problems in the sector, Indian exports toUS stood at $3.07 billion, while that of China ($23 billion), Bangladesh ($3.4 billion), Indonesia ($4 billion) and Vietnam ($5.2 billion) remained descent.


In fact, Bangladesh overtook India as the fifth largest exporter to the US in August 2008, while Vietnam will follow suit in 2009.


India is being edged out by competitors and our share in this growing markethas been shrinking. During January-March 2009, Indian share in US apparel imports fell by 9%, while that of Vietnam grew by 5.2% and Bangladesh was up by 12.95%.


"Our position in the EU market is not satisfactoryeither," Mr Vaid said, adding that the rupee depreciation has not broughtgains for the exporters, since a large number of them have hedged theirexposure and overseas buyers are renegotiating contracts.


Written by Shramana Ganguly Mehta from ET Bureau


Originallypublished in "The Economic Times" dated June 2, 2009, Ahmedabad