Tamil Nadu textile manufacturers to focus on domestic market

By

Isabelle Crossley

Published
May 9, 2018

As garment exports have declined in India, the domestic market could become a more appealing option for garment manufacturers in Tamil Nadu.

Tamil Nadu’s city of Tirupur-based garment manufacturer Anugraha Fashion has decided to focus on domestic business instead of foreign trade for economic reasons and it is expected that other large businesses will follow suit. Other Indian states such as Gujarat and Telangana have seen some government relief but Tamil Nadu has not and has also experienced a hike in labour costs, according to an Economic Times report.

The Indian investor information provider Icra has reported that India’s apparel exports have dropped to 16.7 billion dollars over the 2017 to 2018 period from 17.3 billion dollars over the proceeding financial year. The agency has also cited a drop in trade to the United Arab Emirates totalling a 2.8 billion decline as a major reason for this.

Another reason for a decline in apparel exports was the introduction of the Goods and Services Tax (GST) in July 2017 which raised the tax rate on many clothing items and textiles. Although this was not the case across the board, with the handloom textile Khadi being made GST exempt, the new tax rates caused widespread worry across businesses in the Indian fashion industry.

As countries such as Bangladesh, Vietnam, and Cambodia’s governments have given more competitive tax rates for the garment industry, competition has increased in the region which has also caused concern. These countries now can export to Europe duty free which has made them more attractive to imports in the region and this is a situation that India will have to respond to.