Apparel exports may fall short of target

Jan 11, 2008 (The Economic Times - McClatchy-Tribune Information Services via COMTEX) -- GKLDF | news | PowerRating | PR Charts -- BANGALORE : India's apparel exports, which were projected to touch $9.5 billion this fiscal, is now likely to fall short by a wide margin with the industry now estimating that this figure would be around $8.2-8.3 billion, a decline of nearly 14 percent.

"We had been reporting a year-on-year growth of 10 percent to 15 percent since 2005 when the quotas ended but this year would be different due to the sudden appreciation of the Indian rupee against the dollar," said Gokaldas Exports (GEL), India's largest apparel exporting firm, executive director Rajendra Hinduja.

Many export-dependent sectors like apparel and IT/ITeS have been adversely impacted by a rising rupee. The rupee has gained over 10 percent in the last six to nine months against the dollar on fears of an imminent recession in the US. According to Clothing Manufacturer's Association of India (CMAI) president Rahul Mehta there was an urgent need to re-look at the issues facing apparel exporters. "We are in a position where taxes notably state taxes are being exported. This issue needs to be addressed," he said.

Mr Hinduja said that there was a need to exempt apparel exporters from paying service tax on rented accomodations. "Close to 80 percent of exporters operate out of rented office space and factories. The Union government can exempt us from paying the service tax on such rentals. Currently, factory rentals are as high as Rs 15 per sqft in places like Bangalore," he said.

Specifically talking of GEL, Mr Hinduja said the company was looking at expanding into tier-II towns such as Hubli and Mangalore though not immediately.

"We have already begun the process (of going into tier-II towns) by having facilities both in Mysore and Tumkur in Karnataka," he noted. With the Hyderabad facility becoming operational by April, GEL would be having an annual capacity of 26 million pieces.

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