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Apparel exports to decline by 10% in FY19 due to GST

Friday, July 06, 2018

India's apparel exports downturn may continue and is expected to decline by overall 10% in FY19, a senior industry official said. In 2017-18 exports declined by 4% to USD 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 4% to USD 16.7 billion from 17.38 billion in the previous year," the Clothing Manufacturers Association of India (CMAI) president Rahul Mehta told reporters.

The downturn continued in FY 2018-19 with a month on month decline of 8-10% and it is expected to witness overall decline by 10% in FY19, Mehta said. The country exports nearly 70% of cotton garments and 20% jump in cotton prices in last few months has also hit exports severly, 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 USD 67 billion, which has grown at a CAGR of 10% 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 presence of strong fundamentals, the domestic apparel market size of India is expected to grow at 11-12% CAGR and reach about USD 160 billion by 2025. The domestic market size is dominated by ready-to-wear category, market size USD 56 billion, with 84% share which is further growing at a CAGR of 10-11%. The ready-to-stitch market currently at USD 11 billion is expected to grow at a CAGR of 7% and reach about USD 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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