AEPC Chief Demands Budget Aid As US Tariffs Squeeze Apparel Exports

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AuthorAarav Shah|Published at:
AEPC Chief Demands Budget Aid As US Tariffs Squeeze Apparel Exports
Overview

New AEPC Chairman A Sakthivel confronts rising U.S. tariffs impacting Indian apparel exporters. He outlines a strategy focused on market diversification, increasing Man-Made Fibre garment production, and leveraging FTAs. Sakthivel is urging the government for crucial Budget support, including interest subvention and tax incentives, to offset the competitive disadvantage and bolster the sector's global standing.

Navigating the US Tariff Challenge

A Sakthivel, a veteran of the Indian apparel industry and founder of Poppys Knitwear, assumed charge as the Chairman of the Apparel Export Promotion Council (AEPC) on Tuesday. His tenure begins amidst a critical juncture, with escalating U.S. tariffs posing a significant challenge to India's apparel exporters.

Indian apparel exporters are grappling with a steep 50% U.S. tariff, placing them at a severe disadvantage against competitors from Bangladesh and Vietnam, who face rates around 20%. This disparity is forcing Indian firms to offer price discounts to retain U.S. buyers, absorbing costs to prevent order diversion.

Sakthivel stated the industry is actively working to diversify export markets beyond the U.S. to countries like Russia, Japan, South Korea, Chile, and South Africa. Recently concluded Free Trade Agreements (FTAs) with the UK, New Zealand, and Oman are expected to facilitate this diversification and strengthen India's global apparel market position.

Strategic Agenda: Diversification and MMF Growth

The AEPC Chairman's primary focus will be expanding product categories and export destinations. He highlighted the need to boost exports of Man-Made Fibre (MMF) garments, where India currently holds a small market share despite high global demand.

Current exports are heavily reliant on cotton, with a significant concentration in the U.S., EU, and UK markets. Diversifying into non-conventional destinations is a key objective, aided by new FTAs that promise improved market access.

Sustainability and Tiruppur's Transformation

Sustainability compliance is gaining urgency due to upcoming EU regulations. Exporters must adapt to standards like the Eco-design for Sustainable Products Regulation and the Corporate Sustainability Reporting Directive.

Hailing from Tiruppur, the 'knitwear capital,' Sakthivel aims to transform it into India's 'apparel capital.' This involves leveraging the region's strong sustainability credentials and encouraging manufacturers to diversify into products like swimwear, sportswear, and brassieres, supported by technological upgrades and higher value-added manufacturing.

Budgetary Demands for Sectoral Support

The industry is petitioning the Union Budget for significant support. Key demands include enhancing interest subvention rates from 2.75% to 5%, with relaxed caps for MSMEs, to ease credit access.

The wish list also features a call for reintroducing a 15% concessional tax rate for new manufacturing companies, accelerated depreciation benefits to boost liquidity, and an extension of the loan moratorium. A new Technology Upgradation Scheme tailored for micro MSMEs is also sought, as existing schemes like PLI do not cover them.

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