Complex procedures of DGFT, import restrictions holding up export growth of garment sector: GTRI

22 Jul 2024 Evaluate

The Global Trade Research Initiative (GTRI) in its latest report has said that issues like complex procedures of the Director General of Foreign Trade (DGFT) and customs, import restrictions and domestic vested interests are holding up the export growth of the Indian garment sector. At the root of the exporters' problem is difficulty in obtaining quality raw fabric, particularly synthetic fabric. Unlike in Bangladesh and Vietnam, where exporters easily access quality imported fabrics, Indian exporters struggle daily.

The report stated that the imposition of mandatory quality norms on raw materials like polyester and viscose staple fibres is complicating imports as the BIS (Bureau of Indian Standards) slowly registers foreign suppliers, and this delay compels exporters to buy from domestic monopolies at higher prices. It alleged that the procedures of DGFT and customs are archaic, and it requires exporters to meticulously account for every square centimetre of fabric, buttons, and zippers used. A complex maze discourages even the most enterprising exporters. So, there is an urgent need for a comprehensive overhaul and to modify the production-linked incentive (PLI) scheme for the textiles sector. On the procedures, it said that these issues create serious problems for industry players, and that needs to be resolved.

GTRI also said firms obtain advance authorisations from DGFT for importing duty-free inputs for export production, and the directorate currently requires that unutilised authorisations surrendered to them must be accompanied by a non-utilisation letter/certificate from Customs. This requirement increases transaction costs and effort for the authorisation holder, and Customs is often reluctant to issue such letters, causing delays. Further, the DGFT system allows up to 500 characters to describe export items in an authorisation, but the Customs Shipping Bill only allows 120 characters, so this discrepancy leads to incomplete descriptions being visible to DGFT. As a result, DGFT asks exporters to obtain attested invoices or shipping bills with full descriptions from customs, which customs does not entertain.

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