DGFT, customs process overhaul, revamp textile PLI scheme, QCO suspension to aid exports: GTRI

Think tank Global Trade Research Initiative (GTRI) has suggested suspension of quality control orders (QCO) on polyester and viscose staple fibre for a few years to allow domestic manufacturers to become competitive, expansion of products covered and criteria relaxation in the textile production linked incentive (PLI) scheme, overhaul of Directorate of Foreign Trade (DGFT) and Customs procedures, and addressing monopolistic practices of domestic suppliers, to boost India’s garment exports.

Highlighting complex procedures, import restrictions and domestic vested interests are hindering the export growth of the Indian garment sector, it said that sourcing quality raw fabric, particularly synthetic fabric being the root causes of exporters’ problem.

The report assumes significant in the wake of India losing to other countries even as garment and textile imports rise steadily.

In 2023, China exported $114 billion worth of garments, followed by the EU with $94.4 billion, Vietnam with $81.6 billion, Bangladesh with $43.8 billion, and India with just $14.5 billion.

“This shows India significantly trails behind,” said Ajay Srivastava, co-founder, GTRI.

From 2013 to 2023, Bangladesh’s garment exports grew 69.6%, Vietnam’s 81.6%, but India’s outbound shipments rose 4.6%.As a result, India’s global market share in garment trade has declined from 2015 to 2022. The share of knitted apparel dropped to 3.10% in 2022 from 3.85% in 2015, and the share of non-knitted apparel decreased to 3.7% from 4.6%.Srivastava said that QCOs have undermined the MMF supply chain’s competitiveness by limiting access to affordable and specialized raw materials. Moreover, the Bureau of Indian Standards is slow in registering foreign suppliers and this delay compels exporters to buy from domestic monopolies at higher prices.

Unlike in Bangladesh and Vietnam, where exporters easily access quality imported fabrics, Indian exporters struggle daily, according to the report.

“High import duties on fabrics, coupled with DGFT and Customs; intricate procedures, force exporters to meticulously account for every inch and type of fabric imported,” he said.

Garment imports rose 47.9% between 2018 and 2023 while India’s textile imports increased 20.86% during the period.

GTRI also said firms obtain advance authorisations from DGFT for importing duty-free inputs for export production, and the directorate currently requires that unutilised authorisations surrendered to them must be accompanied by a non-utilisation letter/certificate from Customs, which increases the transaction costs.