RMG exports fail to touch pre-Covid level; slowdown concerns remain

When India’s ready-made garments (RMG) exports were expected to touch the pre-Covid level, the ongoing recession and war in the Westerns world have become a roadblock for the sector. RMG exports from India touched $11.841 billion during the first nine months of the financial year 2022-23, up 6.5 per cent from $11.123 billion in 2021-22, based on data shared by Tirupur Exporters Association (TEA).

The current year’s numbers are 44 per cent higher compared to first nine months of 2020-21 ($8.199 billion), while it had already touched $12.386 billion during the April to December period of 2017-18. In November and December 2022-23, RMG exports saw a rise of 12 per cent and 1 per cent respectively, after showing a decline for four consecutive months from July to October.

Out of the total knitwear exports from India, 63 per cent is going to the US (34 per cent) and Europe (29 per cent), followed by 9 per cent to the UK, based on government data available for the April to November period of 2022-23. “People in the destination countries are giving much importance to the purchase of food articles, gas, power and payment of EMI. There are also apprehensions that 2023 will also be an inflationary year. Recession is building up and hence they are very cautious of spending. Almost all the European countries and the US has cut down on imports,” said Sivaswamy Sakthivel, executive secretary, Tirupur Exporters Association (TEA).

From April to December, out of $6 billion total imports that the country saw, around $3.303 billion was coming from Tirupur only. For the last five months, exports from Tirupur was down in dollar terms, posting a decline of 14.7 per cent in August, 30.7 per cent in September, 39.9 per cent in October, 6.9 per cent in November and 10.1 per cent in December. Exports from Tirupur had increased from Rs 26,000 crore in 2018-19 to Rs 33,525 crore in 2021-22. This has already crossed over Rs 26,000 crore in 2022-23 rupee terms. Owing to a decline in demand, buyers were also asking for a discount of around 15 per cent from exporters in Tirupur.

 “Since yarn prices are better placed with India getting the cheapest yarn at the moment, we are getting strong enquiries for the next three months. We expect this to turn into good orders in the coming months,” said K M Subramanian, president, Tirupur Exporters’ Association (TEA). In its budget expectations, TEA has reportedly urged the government to announce the increasing of Interest benefit under interest equalization scheme to 5 per cent across the board and help to protect knitwear industry and employees depending on that.