India’s apparel exports to decline by 10 per cent in FY19 due to GST: CMAI

The introduction of GST has resulted in non-refund of several embedded taxes. Consequently, exports for the financial year 2017-18 declined by four per cent, says clothing manufacturers body

Indian domestic market has performed better than the largest consumption regions like US, EU and Japan, where depressed economic conditions led to lower demand and growth

India’s apparel exports downturn may continue and is expected to decline by overall 10 per cent in FY19, a senior industry official said.

In 2017-18, exports declined by four per cent to $16.7 billion. “Country’s apparel exports have taken a beating from October 2017 onwards. The introduction of GST has resulted in non-refund of several embedded taxes. Consequently, exports for the financial year 2017-18 declined by four per cent to $16.7 billion from 17.38 billion in the previous year,” the Clothing Manufacturers Association of India (CMAI) president Rahul Mehta told.

The downturn continued in FY 2018-19 with a month on month decline of 8-10 per cent and it is expected to witness overall decline by 10 per cent in FY19, Mehta said. The country exports nearly 70 per cent of cotton garments and 20 per cent jump in cotton prices in last few months has also hit exports severely, he said.

The industry is having talks with the textile ministry and the government has assured that embedded taxes will be refunded through the drawback route. Commenting on domestic apparel market, Mehta said, country’s domestic apparel market is estimated at $ 67 billion, which has grown at a CAGR of 10 per cent since 2005.

Indian domestic market has performed better than the largest consumption regions like US, EU and Japan, where depressed economic conditions led to lower demand and growth. Due to the presence of strong fundamentals, the domestic apparel market size of India is expected to grow at 11-12 per cent CAGR and reach about $160 billion by 2025.

The domestic market size is dominated by ready-to-wear category, market size $56 billion, with 84 per cent share which is further growing at a CAGR of 10-11 per cent. The ready-to-stitch market currently at $11 billion is expected to grow at a CAGR of 7 per cent and reach about $20 billion in 2025.

In order to boost domestic trade, CMAI is organising a 67th national garment fair between July 16-19 this year in Mumbai. Nearly 916 exhibitors in 986 stalls are displaying 1,087 brands. The apparel trade show is expected to transact business worth Rs 700-800 crore, Mehta added.

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