Apparel output drops 10.4% in Apr-Jan; Industry expresses concern

Apparel output drops 10.4% in Apr-Jan; Industry expresses concern

The biggest deterrent to the industry’s sentiments has been severe capital blockage, said Magu.

The Dollar Business Bureau

India’s apparel production has shown a decline of 10.4%, during the period April-January 2017-18, according to the India Industrial Production (IIP) data released by the Ministry of Statistics and Program Implementation.

The production of apparels is witnessing a continuous decline since May 2017, on month-on-month basis.

From a positive growth of 1.3% in April last year, the production declined by 5% in the month of May. In June, the decline was 3.2% while in July, it recorded a dip of 5.1%.

In the months of August, September, October, November and December, the apparel output recorded a drop of 6.4%, 7.2%, 11%, 13.1% and 13.5%, respectively, as per the IIP figures.

Commenting on the decline, HKL Magu, Chairman, Apparel Export Promotion Council (AEPC) said, “For the period April-January 2017-18, there has been a drastic decline of 10.4%, in the apparel production. This has come at a time when exports are already registering a decline. Exports are falling since onwards with January seeing a decline of a 14%.”

“The Industry is suffering as their funds are blocked and they are unable to pay suppliers on time. Suppliers don’t give advance, since they can’t carry them forward for an indefinite period. This has resulted in the decline in apparel production,” he said.

Magu further said that the biggest deterrent to the industry’s sentiments has been the severe capital blockage due to the dual constraint of delays in rebate of state levies (RoSL) disbursements and integrated goods and services tax (IGST) refunds.

“Until the refunds start flowing, things will not improve. The dip in production will not allow us to meet our export target of $20 billion,” he added.

“AEPC has indicated earlier about the gradual decline in the production on account of the issues which have arose after the implementation of GST,” the industry body said in a statement.

AEPC has been engaging with the policy makers for an early resolution of the issues which is hampering the apparel industry, post GST roll out and has made several presentations to the Ministry of Textile, Ministry of Commerce Drawback Committee, NITI Aayog, Parliamentary Standing Committee etc, the statement said.

In its last meeting with Minister of State for MSME Giriraj Singh, an AEPC delegation led by its Chairman informed the Minister that if the capital blockage continues and the cost competitiveness of the industry is not restored, the slippage in exports will continue, with long-term adverse impact on India's positioning in this sector, it said.

Earlier, AEPC also made a request to the Ministry of Commerce to urgently release the total input tax credit and IGST of Rs.4097 crore which is blocked till date.

The industry body has informed the Commerce Ministry that on account of new taxes there is a shortfall of around 5% under GST and therefore several blocked and embedded taxes may be refunded through higher drawback and RoSL rates, along with refund of GST input tax credit (ITC).

The Dollar Business Bureau - Mar 14, 2018 12:00 IST