KOCHI: Garment exports from Tiruppur, the knitwear hub of the country, have shrunk by close to 8% to Rs 24,000 crore in 2017-18 from a year ago period.
This is the first time in the past five years that knitwear exports from Tiruppur have declined. In 2016-17, the exports at Rs 26,000 crore, had shown around 13% increase over the previous year.
The cut in duty drawback scheme from last September is cited as one of the main reasons for the slump in exports. “Till September, the exports were growing at 6%. From October, it fell 13-14% a month,’’ said TR Vijayakumar, general secretary of Tiruppur Exporters Association.
The incentive duty drawback scheme available to the exporters was slashed to 2% from 7.6% in the latter half of the year, which has put India at a disadvantage vis-à-vis competing countries such as Bangladesh, Sri Lanka and Vietnam. “Both Sri Lanka and Bangladesh enjoy duty-free access to Europe and the US, the main buyers of garments,’’ Vijayakumar said.
Tiruppur accounts for 46% of the total knitwear garment exports from the country. The total knitwear exports from the country too saw a decline last year. But the drop has been more for Tiruppur exports. The total knitwear exports from the country fell by just over 5% to Rs 52,170 crore from a year earlier.
The delay in refund of GST and state levies is pointed out as another reason for the setback to exports as it crimped the working capital flow. Most exporters began to get refunds after February.
“The funds crunch affected our order booking. The competing countries took advantage of the situation,’’ said Raja M Shanmugham, chairman of the association. He said the government has to provide incentives either in the form of free trade access or by restoring the duty drawback scheme to earlier level to regain the lost markets.
The exporters have been trying to widen their reach by exploring new markets such as Latin America and Africa in the past few years. “But we don’t enjoy any exclusivity. All the other competing countries are also looking at these markets,’’ Shanmugham said.
The current sluggishness in the international market also necessitate policy support for the exporters, the exporters said.