India’s apparel export targets—which were US$17.25 billion for this year—are now being toned down in view of a lack of enough sops and a tepid market. A reassessment of export targets shows that this year, the country will likely notch exports of about US$16.50 billion to US$16.75 billion.
According to an unnamed official who was quoted in the Indian business daily, Business Standard, the country’s apparel exports will most likely fall short of the initial targets because the European market for apparel has not been as bullish as earlier expected. In February 2015, the expected growth in apparel exports from India was pegged at between 12% and 15%, but managed to expand by just 8%. A few export-oriented initiatives and a no-interest subvention further saw exporters reducing their order-taking capacity.
Currently, about 48% of all apparel exported from India finds its way to Europe. Keeping this in view, the Indian apparel industry has, for a long time, been asking the government for an FTA with Europe. But there hasn’t been any assurance from the Indian government on that front, said the president of the Tirupur Exporters Association.
Currently, the inflation rate in India stands at about 7%, which is higher as compared to that in Europe. What this effectively means, is that the cost of raw materials in India is rising at a faster pace than that of several finished goods in Europe. This makes exports unviable to a great degree. But this could change if the FTA is passed, helping Indian garment exports enjoy duty free apparel to Europe, just as their Bangladeshi counterparts currently do. To make matters grim, the council expects a further dip in apparel exports from India over the next fiscal’s first quarter.