Creased or wrinkled growth for the apparel industry?

Textile industry of India is age-old and forms an important part of the economy. Talking specifically about the apparel industry, it holds 56 per cent share in India’s export basket. The garment and textile industry plays a significant role in enhancing the social and economic conditions of the country. Currently, it holds 2 per cent accountability in gross domestic product (GDP) and sustains the livelihoods of 5.8 million farmers. The Government of India has taken various measures to increase the competitiveness of the textile industry under goods and services tax (GST) regime. The GST rate for the garments and made-up articles is 5 per cent of the sale value, where the sale value shall not go beyond Rs. 1,000. For the articles whose value exceeds beyond Rs. 1,000, the GST is 12 per cent. The man-made fibre yarn’s GST rate has been reduced to 12 per cent, whereas earlier it was 18 per cent, which relatively helps in the cost reduction of the garment factory. Apart from this, the Government has also announced special package for garments and made-up starters in an effort to sustain and support the start-ups. The package includes, labour law reforms, Rebate of State Levies (RoSL), additional incentives under ATUFS, etc. According to the recent textile news in Business Standard, export of textiles and apparels including handicrafts rises to US $ 40.4 billion in 2018-19. rnBut the financial crisis at NBFCs has hit the textile industry hard. Micro, Small and Medium enterprises (MSMEs), forming a major portion of the textile industry, are largely dependent on the non-banking financial contributors (NBFCs). The unavailability of working capital restricts the companies from spreading the horizons further. On the other hand, the process of credit extension is low for that of commercial banks. The whole supply chain including the apparel wholesalers is affected due to the fixture of working capital and high expenditure. Also, the rising imports from Bangladesh are hitting against the stride. The duty-free garment import from Bangladesh proves to be a major pothole on the road since the terms and conditions are not vice versa [this sentence is not making sense. Query should be made]. To increase the textile and apparel imports, the Government increased basic custom duty from 10 per cent to 20 per cent. Bangladesh is world’s second largest exporter of readymade garments with a marginal difference from China. The free trade agreement between Bangladesh and India plus Bangladesh and China allows it to source fabric from China which is duty free, as per the agreement and export readymade garments to India creating a backdoor opportunity for Chinese fabrics to enter the country. rnAs per The Hindu Business Line, import of garments from Bangladesh was 82 per cent to US $ 365 million last fiscal. It has been growing steadily at a CAGR (compounded annual growth rate) of 52 per cent and is expected to touch US $ 3.6 billion by 2024-25. This will render about 10 lakh people jobless with most of the small garment industries being wiped out.