India’s credit rating agency Icra has sounded a warning signal to the apparel export sector stating that the volume and value of exports are likely to be reined in because of the textile industry’s limitations in overcoming external as well as internal challenges that it is faced with.
Textile Industry Faces Liquidity and Export Pressures
A recently issued Icra report contended that the industry is faced with liquidity challenges over the transition to the post-GST regime and global competitive pressures besides the new export incentive regime. This again is accentuated by the additional challenges of impending trade agreements and foreign currency movements. On the destination front, exports to UAE are witnessing a period of uncertainty. This too does not augur well in trends observed in the recent months.
“The accommodative stance taken by the government by way of upward revision in export incentives in November 2017, has addressed one of the issues that the segment is facing.
However, sustainability of growth remains contingent on how the scenario on the other fronts pans out,” said Jayanta Roy, senior vice-president and group head Icra.
The Icra report pointed out that the increase in quantum of export incentives allotted by the centre for the textile industry, though successful in effectuating a growth of 6-20% y-on-y, there was marginal negative growth in apparel exports y-o-y .
In short, According to Icra, following an upward revision in export incentives, our exports to key nations such as US, UK, Germany, France and Spain have registered a signification rise during the November-December period of 2017. However, the overall export figures do not reflect this significant increase and show a downward spiral of 1%..
