Source: Financial Express

In his letter, Raja Shanmugham said though Tirupur had more than 80% of knitwear garment exporting units are basically MSMEs in nature, all these units are striving hard to be competitive and self-reliant.

By: FE Bureau | 

June 11, 2019
Tirupur Exporters’ Association (TEA), India’s leading knitwear/readymade garment export cluster, has sought an alternate World Trade Organization (WTO)-compatible scheme in place of Merchandise Exports from India Scheme (MEIS) to avoid any major setback in terms of exports.

Expressing concern over the Union commerce minister Piyush Goyal’s recent comments to stop depending on aid of subsidies and grants from the Centre, TEA highlighted that the government’s proposal to immediately remove subsidy given to readymade garment sector at this juncture would straight away lead to reduction of our competitiveness in the global market.

“Once if the buyers leave our country and settle in our competing country, then, it would be difficult to bring them back immediately,” said Raja M Shanmugham, president of TEA.  In his letter, Raja Shanmugham said though Tirupur had more than 80% of knitwear garment exporting units are basically MSMEs in nature, all these units are striving hard to be competitive and self-reliant.

The major concern is the absence of a level playing field in the global market and the subsidy system such as MEIS was actually introduced for offsetting the infrastructural inefficiencies faced by exports of specified goods, including readymade garments.

The higher logistics cost and increasing of wages compared to the competing countries were also deterrent factors in enhancing competitiveness, he pointed out. According to him, India is competing with countries, such as Bangladesh, Vietnam, Cambodia, Ethiopia, Myanmar and Sri Lanka, apart from China, which are all enjoying duty-free status in European Union due to either being least developed country status/Free Trade Agreement/GSP+preferences and India is at a disadvantageous position.

Moreover, Ethiopia is enjoying duty-free status in the US. Bangladesh and Cambodia are having duty-free status in Canada. Due to this intense competition in the world textile trade, manufacturers in India are operating in wafer-thin margins, he added. He further said readymade garment sector was providing more employment to the downtrodden people, that, too, 60% to women workers and it was required to protect this industry. And, cotton farmers, he said, as the fortune of industry was directly linked with them directly.

Hence, the Union commerce ministry will have to come out with an alternative WTO-compatible scheme with an equal benefit of MEIS until India inks FTA with the EU, the UK, Eurasian Economic Union (EAEU), Comprehensive Economic Partnership Agreement (CEPA) with Canada, Comprehensive Economic Partnership Agreement (CECA) with Australia and other promising countries for the sustenance of exports. (Source: Financial Express)