No doubt, the textile and apparel industry is unhappy with the recently announced new Foreign Trade Policy (FTP) for 2015-2020 and some garment exporters even feel that it’s a complete disaster since it overrides the initiatives given to boost exports to the earlier designated Focus Markets and Special Focus Markets. Very upset with the new provisions, S. Mundra, CEO, Rajat Collections, Bangalore points out that Under APPENDIX 37C of the Policy for 2009-2014, exports to Countries falling under Table 1 (Focus Market) and Table 2 (Special Focus Market), were eligible for rewards by means of the Duty Free Scrips. While under Table 1, the reward was 3 per cent, for countries in Table 2, it was 4 per cent. These countries have now been grouped under ‘Country Group B’ under the new MEIS scheme, where the reward has been totally deleted (except for Japan, where the volumes are not so significant in any case).
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Further, he mentions that as a result of the downturn in the economies of the EU region, the Government had earlier encouraged the exporters to target non-traditional markets and also designated those focus markets and special focus markets for special attention, because of which exporters spent several lakh in developing exports to these regions. “We ourselves spent hefty amounts in trade fair participations, personal visits on several occasions, development of samples specific to the regions in South America, and started getting good orders. Now, with orders finalized in December 2014 to March 2015, which are to be executed by May 2015, we are staring at a complete disaster. As it is, margins are very low in this region. With removal of 4 per cent incentive, the gross margins become absolutely unworkable, and the buyer is not willing to pay a higher price. Further orders under negotiation have come to a complete stand-still, and the buyer will now go to other countries. We are very small players in the field; imagine the colossal loss staring at the giants in our field,” bemoans Mundra. “This complete turn-around in the policy by the Government is leaving a very bitter taste. Can our buyers in these regions have any trust in us in the future?” he concludes.
