Post demonetisation, GST, and change in duty drawback rates, things in apparel industry have become really tough and challenging. According to you what is the impact of all these steps taken on the current situation of industry and what do you think is the way out? As a company what problems are you facing and how do think the same can be tackled?
Things are very tough at the moment and we are just watching. We are not increasing the staff, or adding up capacities as the recent strategies and decisions taken up by the Government has created a deep void in the business. We are not getting returns on time, the cost of production has already gone up and moreover, new orders are not coming in. My major buyer was the US but now we are only left with 25% of the business. The buyers are not ready to understand and accept high prices as they already have other options to move sourcing. If the Government does not listen to us we should also come united and protests against the move as it was done by Surat traders. The Government still feels that the exports are growing but they will also gauge the situation when they will see analysis of October and so on.
It is a serious situation, as we are losing 8% on FOB, ROSL 2.25%, and service tax refund of 0.7 %, on an average profit is 5% of total turnover in which 8% is gone, 3% percent is loss. Above all our currency is becoming stronger and buyers are not ready to accept higher prices as they already have many options to source. So from all directions everything is moving on a wrong track. The government at the moment is not listening and understanding at the macro level what all these policies will bring in the long run. I do not think protest can help as our industry does not have a common place where all of us can meet and take course of action, if something can be done it has be in right manner. The situation is very unpredictable and at the moment we are just trying Impact on industry is very bad, this has come as a bolt from the blue. We had already negotiated orders and now we have been hit hard for those. Further, with the reduction in the drawback rates, the industry becomes less competitive as compared to other countries. Naseer Humayun, MD, Indian Designs, Bangalore to focus on saving cost, increasing efficiency, and also sustaining buyers who have been working with us as retaining them even if it is on cost of money has to be done because once they go they will never come back. I feel that what the Government was planning was with good intention, but the way things were done in rush and without proper planning has resulted in this situation.
It is a very tough time and the effect is not at all small. We do not know how to tackle the situation. At the moment all new projects have been stopped midway and we do not know by when the situation will improve. We definitely have expectations from the Government regarding duty drawback rates and we can expect some news in November on the same. They have to take some action soon as the industry is second largest employer after agriculture. We are trying to explain the problem to Government and show them the effects in long run. It is really impossible to work on 8% loss and as a result we are not able to accept new orders also.
Impact on industry is very bad, this has come as a bolt from the blue. We had already negotiated orders and now we have been hit hard for those. Further, with the reduction in the drawback rates, the industry becomes less competitive as compared to other countries.