Presentation of Apparel Export Promotion Council to the FM
In its representation before the Finance Minister yesterday, the Apparel Export Promotion Council submitted
++ This is for the first time that a face to face meeting with Finance Minister has been called by the Ministry.
++ Apparel export sector is the 2nd largest employment provider sector after Agriculture, which employs 39 lacs workers directly and around 31 lacs workers indirectly.
++ China employs 65 million people with apparel exports of around USD 23 bn.
++ India exports around 250 crore pieces of garments in a year.
++ The current global scenario is not good. US imports of RMGs decrease by 10.48% in Jan-March 09; Canada imported 1.69% less in Feb, 2009.
++ In 2008, Estimated Global Apparel Trade – USD373 bn
++ India's exports – USD10 bn (2008-09)
++ %age share – 2.6%
++ Last year, garment exports were USD 9.67 bn which accounted for 2.8% world share. Now with export exceeding USD 10 bn , the share has gone down to 2.6%
++ There is a global growth but India is lagging behind.
++ Apparel export sector offers employment opportunities to under-privilege class.
++ As per approach paper for 12 Five Year Plan period, 1.7crore new jobs would be created in Textile and Clothing sector. Workers migrating from Agriculture t o non-agriculture sector would find apparel export sector, the only sector which can absorb them quickly.
++ In 2015, expected global apparel trade– USD692 bn
++ India must achieve USD18 bn to retain the share of 2.6%.
++ This is moderate growth scenario.
++ There is a continuous decline of exports since September 2008. In the month of Apr, 09, the decline is around 8%. This is against 32% growth achieved in April 08 when compared to Apr 07. Therefore, the decline when compared to Apr 07 to Apr 09, is around 40%. (We lost 32% growth and slided down by 8%.
++ Performance of competitors : Their exports to US : China USD23 bn , Bangladesh USD 3.4 bn ; Indonesia USD 4 bn ; Vietnam USD5.2 bn [ India USD3.07 bn ]
++ Overall, Vietnam is growing @5% , Bangladesh is growing @13%.
++ Bangladesh achieved USD 9.22 bn in July March 2008-09 with 19.93% growth & is poised to grow beyond USD 11 bn in full year.
++ Disabilities in India –power cost for US cents 4 per kilowatt hr whereas US cents 10 per kwh in India (250% higher than Egypt) non-refund of states taxes (6%).
++ We need to target : USD18 bn exports by 2015, Investment of Rs.143000 crores , additional sewing machinery installation by 18.44 lacs and 27 lacs new jobs.
++ Short term recommendations (a) to increase drawback at the rate of 14.61% on f.o.b. value of exports w.e.f . Sept 08 from the current level of 8% (b) restoration of section 80 HHC of IT Act (c) removal of FBT .
++ Long term recommendations:
(a) Budgetary allocation for product development
(b) 50% capital subsidy for garment machines
(c) greater funds for TUF
(d) additional interest subvention of 4% to apparel industry
(e) moratorium of two years for repayment of principal amount against term loan
(f) PLR for T&C industry should be pegged at 2% tower than PLR
(g) exemption of CVD on garment machinery
(h) exemption of custom duties on industrial garment machines,
(i) Financial support for undertaking research and development activities (Pakistan had announced withdrawal of their export incentive scheme by way of R&D assistance. The R&D assistance at 6% has now been reintroduced for garments & China has increased the refund of VAT from 11 to 13% on exports; Financial support for subsidizing power and labour cost.