Apparel exports are likely to remain subdued with the base effect setting in and due to uncertain government policies. India’s apparel exports are expected to fall 4 per cent this fiscal even as they are expected to register a modest growth of 2 per cent in the remaining eight months of the financial year, rating agency ICRA said in a statement on Tuesday.
In the last four months, apparel exports were down 14 per cent. It will be the fourth consecutive weak year for the sector, following the 4 per cent decline in FY18 and modest growth of one per cent and three per cent logged in FY16 and FY17 respectively.
Jayanta Roy, Senior Vice-President, ICRA, said notwithstanding the transition to the new taxation regime and liquidity challenges, the industry faced uncertainty over changes in export incentives. Further, he said the rupee movement affects competitiveness of players in an intensely competitive international apparel market.
Contrary to the global trend, the apparel sector’s performance in India is worrying.
Global trade
In the first half of 2018, the global apparel trade in dollar terms registered a growth of 5 per cent compared to 2 per cent logged in 2017. The positive trend in the global apparel market is being led by the strong recovery in apparel imports by the European Union, which accounts for two-fifth of the global apparel trade.
However, the industry is concerned about the sustainability of the export subsidy scheme in India, after the US challenging it at the World Trade Organisation.