India : Sick garment cos recieve no medicine from Budget
February 29, 2014
The Union Budget 2014-09 is sadly a missed opportunity for ensuring long term employment and livelihood for the poorer sections and women, which the garment industry could have offered.
Instead of opting for short term relief measures for the “aam admi†through loan waivers, reviving this industry could have given long term employment opportunities to much larger sections of the society.
The industry has been crying since April, 2014 about the appreciating Rupee and very fast erosion of competitiveness of this sector. The industry was expecting concrete proposals to address the issue of competitiveness and specific concerns relating to power, infrastructure and credit.
However, the budget has not addressed any supply side shortages except for skill development. The council is happy to note the measures taken for improvement in higher education and skill development.
The enhancements in TUFS and SITP may help the downstream textile industry but the garment industry, which is expected to contribute 50% of the exports in Textile & Clothing (T&C) sector in the 11th plan, has not been provided with any succor.
Although concern was expressed at the slackening manufacturing sector growth, specially textile and apparel products, no remedial measures was announced. The Council had been urging for refund of state levies to partly dilute the erosion in realizations, which have been to the tune of 15% in the current year.
Zero import duty and excise duty on machines could have encouraged fresh investment as also mordernisation, both critical for improving competitiveness of this sector.
Some of the other recommendations of the Council had been ceiling of PLR for T&C industry below the general PLR to improve investment, enhancement in drawback to match the erosion of realizations and a Product Development Fund for incentivising product diversification.
The council is hopeful that atleast some of the policy reform options suggested in the Economic Survey, like increase in work hours to meet seasonal demand, shall be exercised in the coming year.
Apparel exports are expected to record a decline of 13% – 14% in rupee terms in the current fiscal, the steepest fall in the last five years. On the job front, losses to the tune of 6 lakh are expected in the current year.
The industry foresees continuation of closures and job losses in 2014-09 and large scale shift in garment manufacturing and sourcing to neighboring destinations, in the absence of any policy support at this juncture.
Apparel Export Promotion Council (AEPC)
