The domestic textile industry sees calendar year 2018 as a mixed bag. Industry players are of the view that the period was better than 2017 when the industry struggled to move out of the adverse impacts of GST and demonetisation.
In the last few months, the industry has shown a great deal of grit and, to a large extent, managed to come out of the blues of these two major challenging events.
After dismal performance on the micro and macro economic fronts in the previous couple of years, 2018 has seen some green shoots and recovery is on the cards. However, as a whole, they are of the opinion that despite the improvement in the outlook, there is need to maintain guarded optimism for the year ahead. “Overall, 2018 was a better year when compared with the previous year, but it was not a great year. We are finishing with lot of optimism though.
We are optimistic of turning around. However, there are multiple challenges to surmount. All said and done, the industry is on a comeback trail for sure,” says Sanjay Jain, chairman, Confederation of Indian Textile Industry.
“In the last few months, we have seen things gradually settling down, even as we are not completely out of impediments. There are issues that need to be addressed in a more focused manner.
The global trade order has undergone a major change and as a country and an industry, we will have to make necessary adjustments to not only face the ongoing situations effectively but also gear up to grab the opportunities,” says Shishir Jaipuria, chairman and managing director, Ginni Filamants Ltd.
“Barring some sparks in some of the months, on the export front (garments), things are not so encouraging. Till December, we are around 5-7% below last year’s performance. Domestic market has also been sluggish.
Bigger players have shown some moderate growth of 7-8%. But smaller ones which constitute the much bigger pie of the industry, are yet to see any growth post demonetisation. Imports from Bangladesh are a major concern as imports till June 2018 (for the fiscal year 2019) has grown over 50%,” states Rahul Mehta, President, Clothing Manufacturers’ Association of India (CMAI).
According to Arun Singh, Lead Economist, Dun & Bradstreet, the series of events which occurred during the year did not give a positive push to the growth momentum. It posed uncertainty, shocks to the economy.
The sudden jump in oil price, the strong unexpected fall in rupee, the NBFC fiasco and the subdued performance in the financial services sector, the reduction in the GST rates for several commodities which would lower the revenue collection of the government has added to the string of domestic uncertainties in addition to the trade war and tariff restriction imposed by various countries globally. Moreover, the uncertainties during the run-up to the general elections till the results are announced is likely to cause a dent on growth.
Meanwhile, FICCI has welcomed the reduction of GST rates on 23 items by the GST council at its meeting held on Saturday (December 22) and taking the landmark reform to the next level by indicating that the 28% bracket is already moving towards a sunset.
With a reduction in the rates on more items in the offing in the next meeting of the GST Council next month and the indication that the remaining issues pertaining to GST application and administration will be resolved speedily, the tax reform is set to yield larger gains for the economy.
“The GST council has followed a pragmatic policy by bringing down the rates gradually taking into consideration the revenue realisation and affordability and this will stabilise and strengthen GST further.
The government has been proactively engaging with various sectors and I am confident that going forward the Council would continue to address issues,” states Sandip Somany, President, FICCI.