Garment manufacturers in Gujarat have cut production due to a reduction in demand. Usually, traders and retailers place orders two months before Diwali and garment manufacturers dispatch orders by Dusshera. But this year the pre-festival business has gone down by about 40 per cent on account of lower purchasing power, disturbed payment systems and weak exports.

Dubai is the leading buyer of readymade garments. But exports of readymade garments have fallen due to the value added tax in Dubai. GST and demonetisation have affected the payment cycle of the industry and because of this the overall business has gone down. There are over 5,000 garment manufacturers in Gujarat. Gujarat’s textile and garment exports have fallen by 30 per cent after the cut in incentives that came with the implementation of GST.

Export incentives for cotton and polyester have reduced roughly by four per cent. This makes products more expensive in the international market and reduces exporters’ competitiveness. Gujarat accounts for 12 per cent of all apparels exported from India. Sri Lanka and Middle Eastern countries are some of the key markets for garment manufacturers from Gujarat.

With a cut in duty drawback, there is stiff competition from the likes of Bangladesh and Vietnam, both of which get tax incentives in addition to export incentives. Besides, these countries are preferential importers for several global markets.