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Despite recovery in exports to US, India’s textile exports decline 8%

Despite a recovery in exports to the US, India’s shipment of textiles and apparel declined by a staggering 8 per cent during the period between April and November 2019 due to contractions in other markets, including the European Union and the Middle East. However, overall textile and apparel imports into the country jumped by a staggering 15 per cent during April – November 2019 in the corresponding period in 2018.

Data compiled by the Directorate General of Commercial Intelligence and Statistics (DGCI&S) under the Union Ministry of Commerce showed India’s total exports at $21.7 billion for the period between April and November, 2019, compared to $23.6 billion in the corresponding period in 2018. During the same period, however, India’s overall imports of textiles and apparel jumped to $5.5 billion this year versus $4.6 billion in 2018.

“India’s exports of textiles and clothing were severely affected by the global situations like the trade conflict of US with China, The European Union’s struggle with Brexit, the growing geo-political tensions in the Middle East and the removal of Generalised System of Preferences (GSP) benefits to India by United States,” said K V Srinivasan, Chairman, Cotton Textile Export Promotion Council (Texprocil).

Under the GSP, developed countries grant import duty concessions in addition to prioritising purchase of textile and apparel products from certain countries. India’s apparel exports to the US jumped by 6 per cent to 6 per cent to $2.7 billion in April – November, 2019, versus $2.6bn in the corresponding period in 2018.

Meanwhile, Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), said, “The delay in announcement of the new Scheme of the Remission of Duties or Taxes on Export Products (RoDTEP) is set to result into further 3-4 per cent contraction in apparel exports. Many textile players signed export contracts on expectations of continuation in the Merchandize Exports of Incentive Scheme (MEIS) and Remission of State Levies (RoSL). The delay in its announcement has blocked working capital of exporters.”

To overcome the short term problems in the textile industry, the government needs to extend benefits to all sectors in the value chain.

“Cotton yarn also bears the same incidence of state and central levies similar to made ups and garments. Therefore, cotton yarn should be covered under the RoSCTL scheme and the MEIS and also under the 3 per cent Interest Equalization scheme,” said Srinivasan

With the sentiment weak in the entire textile sector, promoters have started increasing their stakes in the companies to take advantage of cheap valuations of companies.

Textiles major Arvind Ltd and AYM Syntex also registered an increase in promoter holding during the last two quarters. Arvind’s promoters increased their holding by 1.67 per cent to 44.75 per cent in Q3FY20 as compared to 43.08 per cent in Q1FY20. AYM Syntex promoters increased their holding by 2.5 per cent to 72.5 per cent in Q3FY20 as against 70.0% in Q1FY20. Promoters of Filatex India, polyester maker increased their stake in the company by 2.01 per cent in the last two quarters to 59.73 per cent now as compared to 57.72 per cent in quarter ending June, 2019.

Source: Business Standard