Indian apparel exports are burdened with duties in the EU and US markets. These blunt the country’s competitive edge. Now that Vietnam has signed a free trade agreement with the EU, which enables apparel exports at zero duty, Indian exports to these markets will be impacted adversely.

Over the years, Indian apparel exports have been in distress and survived largely due to export incentives. While these incentives have proved partially useful, they have not helped Indian apparel manufacturers compete on price with their competitors. Some Indian apparel makers feel they can shift their existing manufacturing to Vietnam and Bangladesh to benefit from tariff arbitrage, labor laws, low wages, conducive business environment and, hence, better return on capital employed. Employment ratios in apparels are far more attractive than in agriculture or automobiles. The man-machine ratio in apparels is far better than farmers to cultivable land ratio, which has fallen significantly over the years. In the automobile sector, too, for every crore revenue earned a company generates 0.45 jobs, while for an apparel manufacturer, a crore earned in revenue creates 18.5 jobs.

The apparel industry is the country’s largest low technology employer after agriculture, with 45 million workers contributing two per cent to the GDP and 15 per cent to export earnings.