Indian textile industry is one of the largest textile industries in the world. Today, Indian economy is largely dependent on textile manufacturing and exports. India earns around 27 per cent of the foreign exchange from exports of textiles. Further, Indian textile industry contributes about 14 per cent of the total industrial production of India. Furthermore, its contribution to the gross domestic product of India is around 3 per cent. Indian textile industry involves around 35 mn workers directly and it accounts for 21 per cent of the total employment generated in the economy.

But there is a huge drop of 40.75 per cent in apparel exports in October 2017 to Rs. 5,398.08 cr compared to exports of Rs. 9,110.75 cr in same month of the previous year. For the period of July-October 2017, there has been a drastic decline of 5.94 per cent in the overall exports of apparels from India. Exports of man-made textiles, including yarn, fabric, made-ups, etc. during the month dropped 8.26 per cent to Rs. 2,309.57 cr, as against exports of Rs. 2,517.51 cr in October 2016. The fall is one of the highest in percentage terms and garment export was the worst performing export category in October.

The fall was expected as exporters particularly MSME were facing liquidity problem to pay GST for four months in a row without getting any refund and reduction in duty drawback rates under the new regime. The decline in these highly employment-intensive sectors is a worrisome sign.

There is immediate need for remedial measures to prevent further decline in exports otherwise the situation may be worse. The industry is rightly demanding that exports should be kept out of the purview of GST as paying the tax first and getting refund is cumbersome, complex and complicated affecting exports.