The technology upgradation fund (TUF) will help the garments industry to spruce up its act, which, in turn, will improve the quality of output and reduce costs, said Shantilal Kubadia, chairman of the national garments' fair committee of the Clothing Manufacturers' Assoc-iation of India, in an interview with Devendra Vyas. Excerpts:
What is the status of readymade garment exports?
Exports of readymade garments from the country have been largely affected by the recession in the US, Japan and European countries which are our main markets. Unit dollar values for garments exported have declined steadily from $4.22 per piece in 1995 to $3.74 per piece on 1997.
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Although the US and some European markets are now out of recession, unit value realisation for garments exported has continued to decline. For the first six months of 1999, the figure stands at $3.69 per piece.
The main reason for this sustained decline in our realisations abroad is the fact that our product base for exports is too narrow with hardly four varieties accounting for over 60 per cent of the total exports.
Another important factor is the quota entitlement policy which, over the years, has been merely tinkering with the percentage of entitlement for various sectors without analysing the need for certain sectors or ascertaining whether the entitlement is disbursed to the real beneficiaries.
How will the small-scale readymade garment units battle the brisk inflow of imported stuff?
We have recommended import of garments under open general license (OGL) but such imports should be of good quality. At present, poor quality under-priced garments from Hong Kong and China are being dumped.
The existing 40 per cent ad valorem import duty offers no protection against such garments. The problem becomes worse when one considers that the sum total of taxes/ duties imposed on inputs for local garment manufacturers ranges between 36 to 39 per cent.