Bangladesh takes over China as the largest cotton export market, with Vietnam a potential market too. India's textile and clothing industry again has witnessed a downward trend in the exports segment. The exports have tumbled marginally by 0.2% to US$ 36639.4 million (FY 2016-17) over the previous fiscal. In the exports segment, T&C accounts 13% of the country's total exports in the last fiscal, where in 2015-16 and 2014-15, the sector accounted for 14% and 12% respectively. Presently apparels are ruling the export basket with a 48% stake in the total T&C exports with a growth of 6.6% in 2016-17. The 2016-17 exports remained far away from the set target of US$ 48000 million, as demand from China was cold and as US and EU market remained fragile for the fiscal. After analysing the export data for T&C, the government has cut down export target to US$ 45000 million for the current fiscal, and expected to reach the target with the new tax system 'GST' introduced this July. Countrywise, USA is the topmost market for India's T&C exports. The exports to USA have witnessed a growth of 1.1% to US$ 7604.38 million in the last fiscal and accounts for a share of 21% in India's total T&C exports. Apparel exports are ruling the basket in USA market with total of US$ 3861.96 million and it accounts 50% share from the total T&C export to USA. However the apparel exports to USA have clocked a negative growth of 2.48% in the last fiscal. India's cotton exports to the USA have dropped by 5.5% to US$ 116.31 million in last fiscal. The other top nine T&C export markets are UAE, UK, Bangladesh, Germany, China, Spain, France, Italy and the Netherlands. India has managed to balance the total T&C trade with a growth of 0.2% in the last fiscal totalling to US$ 42591.84 million. GST Impact on T&C exports The T&C exports which contributes about 13% of the total annual exports and provides employment to a large number of skilled & unskilled workers in the county, is likely to increase under GST. With the new tax system rolled out from July 1, many HS codes of textile that were exempted from tax would now be taxed under GST. Despite this, the entire textile industry would benefit from newly introduced tax. Major portion of the textile industry works under the unorganised sector; hence it was creating a gap in inputting tax credit. Now under GST, input tax credit is not allowed if the registered taxpayer obtains the inputs from vendor belonging to the unorganised sector. GST even includes border tax like octroi, entry tax and luxury tax, VAT, etc, which would now reduce the manufacturing cost in the industry. Moreover, special economic zones are exempt from GST. This could bring in more investments and higher production to the SEZs, increasing export. This simplified tax system would make the industry more organised, and thus would make the Indian textile industry more competitive in the export market. Negative Trends on Cotton Exports India, being the world's largest producer of cotton, has witnessed a drop in the export market consecutively for the third fiscal year. In FY 16-17, cotton exports fell by 9.2 % to US$ 6637.63 million compared to the previous fiscal '15-16, where the commodity had witnessed a decline of 5.3% to US$ 7302.02 million. The commodity has also lost its share by 2%, now at 18% from total exports of T&C. Bangladesh has taken the spot from China as the largest importer of India's cotton as demand from China continued to remain low. The cotton export to Bangladesh valued to US$ 1602.53 million with a share of 24% from the total cotton exports, while exports to China fell almost 20% to US$ 1348.43 million. In terms of export value, Pakistan has come down drastically by almost 39% to US$ 483.22 million in FY 16-17, but the country has managed to retain its position at the third largest market for Indian cotton. Cotton exports to Vietnam were up 7.5% to US$ 281.81 million. According to reports, Vietnam's domestic production of cotton meets only one percent of the industry's demand. The county needs tons and tons of cotton to satisfy the needs for its garments and textile manufacturers. Hence, Vietnam is another important cotton market. India's exports to Sri Lanka increased 4.2% to US$ 241.42 million. Cotton yarn exports down Despite strong demand from Bangladesh, overall cotton yarn exports remained low in last fiscal year, as demand from China remained sluggish. India's cotton yarn exports witnessed a negative growth of 7.15% to US$ 3350.2 million in FY 16-17 compared to the previous fiscal. Even as China remained the top importer of Indian cotton yarn, its imports from India were down almost 29% to US$ 1048.83 million. Bangladesh's strong demand for India's cotton yarn could change the statistics in the next few years. In the last fiscal year, Bangladesh perceived a growth of 3.7% to US$ 577.99 million. Apparels rule the league Apparels account for a lion's share of 48% of the total T&C exports. Apparel exports have registered a growth of 6.6% to US$ 17478.97 million in 2016-17. In the apparel export sector, woven apparels are ruling the basket with a share of 53% but has recorded a negative growth of 1.2% to US$ 9212.02 million in the last fiscal year. In the woven apparels exports, women/ girls suit, jacket, dresses, skirt, blazers etc., were exported the most from India and the export value totalled to US$ 2422.02 million in the last fiscal. Knitwear apparel exports have shown an impressive growth of 7.8% to US$ 8266.95 million in the last fiscal year. United Arab Emirates has taken over USA as India's leading market for knitwear exports. UAE has shown a vast growth with 28.3% to US$ 2131.66 million in 2016-17. The other top knitwear export markets are USA, UK, Germany, France, Spain, Italy, Saudi Arab, Netherland and Poland. MMF exports witnesses a fall Indian's man-made filament (MMF) textile exports have witnessed a negative growth for three consecutive years now. In 2016-17, the MMF exports dropped by 3.1% to US$ 1995.05 million compared to the previous year. The commodity accounts for 5% share from the total T&C exports of the country. Under MMF section, synthetic filament yarn is the main commodity exported with value of US$ 1041.34 million with growth of 10% in the last fiscal. As per the statistics, Turkey is the topmost market for India's MMF exports. India has exported US$ 256.18 million of MMF commodity to Turkey in 2016-17. Brazil being the second top market for the commodity has shown impressive values on the board, it has witnessed a growth of 69.8% to US$ 201.46 million. Cotton imports account for 19% of India T&C imports India's T&C imports have registered a growth of 3.1% to US$ 6046.54 million over the previous year. The T&C imports account for 16% of the country's total imports in the last fiscal. In the import segment, cotton imports are ruling the basket with 19% share from the total T&C imports of the country. The cotton imports have witnessed a growth of 88.8% to US$ 1132.09 million in 2016-17. India has imported most of the cotton from USA and Australia. India's imported cotton from USA totalled US$ 289.51 million in the last fiscal. Cotton imports from Australia have improved over the fiscal year, the imports totalled US$ 282.86 with growth of 845%. In 2015-16, China was the top market for India's cotton imports, but according to the last fiscal data, China stands at third position in the cotton imports of India, where China has witnessed a negative growth of 4.2% to US$ 124.37 million. Data Source: DGCI&S, Kolkata
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