Textiles and Apparel
though a few rely on trading companies and other intermediaries. Firms take around 30 days between order confirmation and the delivery of finished garments to the port of embarkation. The Role of Government The government greatly facilitated the industry’s expansion through industrial policies that have alleviated constraints on firms. The first step was passage of the Export Processing Zone Act in 1970. The act introduced powerful incentives for manufacturers to export. Key components of the new legislation included protective import duties and quotas for fledgling industries, suspension of import duties on inputs and equipment not locally available, rebates of import duties on other raw materials and components for specified industries, duty drawback schemes, and favorable long-term investment loans. Dutyfree imports of inputs for manufactured exports were especially important in maintaining the sector’s competitiveness in world markets. Throughout the rise and growth of the textile and apparel export industry, the exchange rate and fiscal regimes have been favorable, helping keep input costs low. The government has maintained a competitive exchange rate so that Mauritian exports have remained competitive internationally. It has provided numerous incentives to export. Tax incentives in the early years subsidized export firms. These incentives, combined with the availability of relatively cheap semiskilled labor, led to a strong wave of investment in the export sector in the 1980s. Firms in the zone were given a tax holiday of 10 years; no taxes were imposed until 1993. Strong institutional support has helped deepen market penetration and disseminate skills. The Mauritius Export Development and Investment Authority, formed in 1985 as a public trade and investment promotion agency (with some private sector membership), has been a pivotal institution behind the country’s export growth and industrial upgrading. Providing overseas marketing support for exports and arranging buyer-seller meetings, it has helped explore niches for Mauritian garments in European and U.S. markets. Textile companies articulate their concerns through the private sector–funded Joint Economic Council, the primary private institution for business relations in Mauritius. The Chamber of Commerce, in operation for more than
407