The Goods and Services Tax (GST) has brought changes in the economy which have been in the form of positive as well as negative effects. The recent one has emerged in the apparel sector which has witnessed a drop of 3.46% in apparel exports in 2018-19 as compared to the earlier period.
This has mainly happened because exporting units took time to adjust to the new rates under the GST.
In the year earlier period, apparel exports were $16.71 billion while in the last financial year, the apparel exports were worth $16.13 billion. The export however grew 4.66% in rupee terms. In the financial year 2018-19, the downturn has continued with a month on month decline of 8-10 percent.
There was almost 7 percent reduction in the incentives that was received by the exporters earlier. A. Sakthivel, vice-chairman of Apparel Export Promotion Council (APEC) told that the exporters alo had to adjust to the new system.
It has been stated by the advisor to the council, Chandrima Chatterjee that the global apparel market had been stagnant and that the leaders in the apparel export segment such as Bangladesh and Vietnam have witnessed growth. She further emphasized the need to strategise to position Indian products in the international market.
However export of the overall cotton textiles including cotton yarn increased almost 10% in the previous financial year as compared to the year-earlier period.
After the announcement by the Centre about the reimbursement of embedded taxes, there has been a surge by 15 percent of apparel exports in March. Exports in the current year may get a boost due to this.
In 2018, the GST Council had reduced the rates on certain textile items like chenille fabrics, handmade lace, hand-woven tapestries, hand-made braids and ornamental trimming in the piece, handmade carpet and other handmade textile floor coverings from 12 percent to 5 percent.
Image Source: www.thehindu.com