DGFT, Customs Process Overhaul, Textile PLI Scheme Revamp, QCO Suspension to Aid Exports: GTRI
By 2024-07-22 10:43:22
DGFT, Redesign of the Textile PLI Scheme, QCO Suspension to Promote Exports: GTRI
The Global Trade Research Initiative (GTRI) has recommended several measures to boost India’s garment exports. These include suspending quality control orders (QCO) on polyester and viscose staple fibre to allow domestic manufacturers to become more competitive, expanding product coverage and relaxing criteria in the textile production linked incentive (PLI) scheme, overhauling Directorate of Foreign Trade (DGFT) and Customs procedures, and addressing monopolistic practices of domestic suppliers.
GTRI highlighted that complex procedures, import restrictions, and domestic vested interests are hindering the growth of India’s garment export sector. The think tank identified sourcing quality raw fabric, particularly synthetic fabric, as a major challenge for exporters.
This report gains importance as India continues to lag behind other countries in garment exports despite a steady rise in textile imports. In 2023, China led with $114 billion in garment exports, followed by the EU with $94.4 billion, Vietnam with $81.6 billion, Bangladesh with $43.8 billion, and India with only $14.5 billion. “This shows India significantly trails behind,” said Ajay Srivastava, co-founder of GTRI.
Between 2013 and 2023, Bangladesh’s garment exports grew by 69.6%, Vietnam’s by 81.6%, while India’s exports rose by only 4.6%. Consequently, India's global market share in garment trade has declined. The share of knitted apparel dropped from 3.85% in 2015 to 3.10% in 2022, and non-knitted apparel decreased from 4.6% to 3.7%.
Srivastava pointed out that QCOs have undermined the MMF supply chain’s competitiveness by limiting access to affordable and specialized raw materials. The Bureau of Indian Standards is slow in registering foreign suppliers, forcing exporters to buy from domestic monopolies at higher prices. Unlike exporters in Bangladesh and Vietnam, who can easily access quality imported fabrics, Indian exporters face daily struggles due to high import duties and complex DGFT and Customs procedures. These challenges force exporters to meticulously account for every inch and type of fabric imported.
Between 2018 and 2023, garment imports rose by 47.9%, while India’s textile imports increased by 20.86%.
GTRI also noted that firms obtain advance authorisations from DGFT for importing duty-free inputs for export production. The DGFT currently requires that unutilised authorisations be surrendered with a non-utilisation letter/certificate from Customs, which increases transaction costs.
