India’s Readymade Garment (RMG) export to World for the financial year 2023-24 were to the tune of USD 14545 Million despite an extremely turbulent year marked by recession, wars and inflationary pressure. Since last few months Apparel Sector is on a higher growth trajectory despite global headwinds whereas some major apparel exporting countries have witnessed slowdown in the RMG export growth. The cumulative RMG exports for the period April- December 2024-25 is USD 9853.9 million showing a growth of 11.4% over April-November 2023-24. The long-term outlook for Indian apparel exports remains positive. With the supply chain getting re-aligned due to the Bangladesh crisis and the global buyers looking for China’s alternative. Can 2025 be a year of new hope, TEAM PERFECT SOURCING interacts with AEPC Chairman Sudhir Sekhri on the same.
PS: What are the major challenges for our sector?
Sekhri: We have been low on productivity compared to the global standards which is hurting our competitiveness. The international benchmarking on manufacturing excellence says we are just 45-60% in terms of factory efficiency while Bangladesh is 50- 65% as against the global average of 75-85%. In terms of cut to ship ratio and on-time delivery we are below the global average and fairly lower than Bangladesh. It is possible for industry to fetch 7.8 billion USD extra revenue without investing in capital. The need is to tap 15% to 25% of potential in the existing factories with people and process improvement plans getting implemented.
Another big challenge relates to capacity. The textile sector needs additional investment to meet the rising global demand. The lack of economies of scale is another major handicap in the apparel manufacturing sector. Capacity utilization is another issue due to absence of winter wear in our export product basket. The pressing problem relates to the labor law. The overtime rates in the industry are very high. Overtime rates, as per the norms of the International Labor Organization, are 20-25 per cent in excess of the normal wage rate whereas it is twice the normal wage rate in India. Labor laws should be amended to align Indian overtime wage rates with ILO norms.
PS: How Bharat Tex Expo 2025 is different from the normal Buyers Seller Meet (BSM)?
Sekhri: The Bharat Tex 2025 is different in terms of size, dimension, scale, scope, intent and approach. One of the biggest textiles show on the globe with 5000 plus exhibitors cutting across the entire textiles value chain, 6000 plus international buyers from over 110 countries and 120 000 plus trade visitors will be a textile extravaganza in true sense of the term, aimed essentially at demonstrating the Indian textile story and eco-system to the rest of the world by showcasing India’s unique strength across the entire textile value chain.
PS: What are your expectations from Bharat Tex Expo 2025?
Sekhri: Bharat Tex 2025 will celebrate successful partnerships with brands and retail chains, underscored by shared values of quality, innovation, and sustainability. This event will help position India as a global leader in textile production and the opportunities for further growth in export and innovation. Efforts will be made to explore the role of sustainable materials in reducing environmental impact and enhancing India’s reputation in eco-friendly textile production. There will be knowledge sharing sessions to discuss the potential partnerships and collaborations that could help elevate India’s textile industry, including research, development, and export strategies. I am sure this platform will enable great collaboration and expand sourcing networks. Bharat Tex Expo will provide a dynamic landscape of the textile industry and create the synergy between innovation, sustainability, and global branding for growth.
PS: Which are the areas where AEPC has worked on and also needs support from the current government?
Sekhri: AEPC has requested not only for continuation of the interest equalization scheme also enhancement of the interest equalization rate to 5% to offset high cost of capital. AEPC has proposed extension of concessional tax rate under the section 115BA of income Tax Act for the new manufacturing units to encourage setting up of new garment units. RMG industry has also demanded removal of Sec43B (H) of IT Act in the ensuing budget which pertains to payment to any MSME companies within a maximum 45 days’ time to claim any deduction in tax.
This has increased tax liabilities and has disrupted the cash flow of exporters. Many buyers adhere to the standard payment window of 90 to 180 days, so exporters have to extend a long credit period for payment. Therefore, exporters should be excluded from the purview of 43B(h) of income tax. The procedure of Imports of Trims and Embellishments under IGCR (Import of Goods at Concessional Rate) should be simplified and minimum wastage of 10% be allowed under the IGCR rule for the import of trimmings and embellishment.
The council has requested for liberalizing e- commerce export procedures. These existing rules should be simplified, the cap per consignment of export value under e- commerce should be increased to minimum 25 lakhs and export realization period should be extended to 12 months.
India’s garment export sector relies heavily on imported garmenting machinery to maintain quality and global competitiveness, as domestic production is insufficient to meet demand. High import duties make Indian garments exports less competitive vis-a-vis countries like Bangladesh and Vietnam.
AEPC has recommended not only continuation of existing exemptions but also reduction of the customs duty to zero on remaining garmenting machineries to enhance the sector’s competitiveness.
