Date:11/10/2004 URL: http://www.thehindubusinessline.com/2004/10/11/stories/2004101102020300.htm

Back Apparel exporters seek more policy support from Govt

Our Bureau

Chennai , Oct. 10

THE Centre will have to spruce up its act on policy and regulatory issues, if it expects apparel exporters to face international competition.

According to the Apparels and Handloom Exporters Association, there are serious gaps in policy and the Government's approach to encouraging apparel exports, which account for about 20 per cent of India's exports and 14 per cent of industrial output. The association does not share the optimism that the Government has on the growth anticipated in the post-quota regime starting from 2005.

Addressing reporters here on Saturday, the Apparels and Handloom Exporters Association's President, Mr Ranjit Singh, said that the industry here has grown "thanks to its own resilience. The Government has not been of support."

But whether it will continue being competitive from 2005, when countries will no longer be given quotas for exports to developed markets in the US and Europe, is now a question, he said. The industry's strengths in apparel exports are its superior design, cheap labour and raw material.

But its main competitor, China, also has cheap labour and raw material, if not the design. Yet, there are a host of constraints here, he said.Apart from the industry being fragmented, policy-related issues such as high interest rates and power tariffs, unfriendly labour laws and transport bottlenecks prove a burden. For instance, transporting a container from Delhi to Mumbai costs Rs 42,000, while Mumbai to South Korea is Rs 20,000.

On the other hand, its main competitor, the industry in China is supported by its government in keeping costs low and providing infrastructure. "We can take on the Chinese industry. We cannot take on the Chinese Government," said Mr Singh.

While not wanting to seem too critical of the Centre, he said, the idea is to "forewarn the Government" of the impending problem, because it has not "awakened to the situation," he said. From January 2005, Indian exporters can no longer look forward to assured quotas from buyers in developed countries. They will be looking at efficient and low cost sources of exports.

China accounts for about 18.5 per cent of the world trade in apparels, Italy accounts for 6 per cent and India 3 per cent. Even if it hopes to hold its ground or target a doubling of its exports, it has a lot to do on competitiveness.

According to association representatives, the exporters depend mostly on power looms to source fabrics. But these are more expensive than the mills. The mills have their own priorities, and simply take too long to supply to exporters. It is easier to source fabrics from China, they said.

The exporters have faced problems and delays in quota issue, DEPB (Duty Entitlement Passbook Scheme rates) and a host of other regulations. But if the Indian industry has to take on international competition, the Government will have to work more closely with the industry, he said.