FTAs can double India's apparel exports in 3 yrs: AEPC

14 Jul '20

2 min read

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The signing and the subsequent implementation of free trade agreements (FTAs) with the EU, the US, the UK, Australia and Canada can help India double its apparel exports in three years, the Apparel Export Promotion Council (AEPC) has said. India is currently negotiating FTAs separately with the EU, Australia, and Canada, and a limited trade pact with the US.

The Indian apparel industry has been very badly impacted in its principal export markets of the US, the UK, and Europe due to the COVID-19 pandemic, and FTAs with these countries/regions would give a significant boost to the sector, AEPC chairman A Sakthivel said in a letter to Prime Minister Narendra Modi.

Although the government is taking steps to revive exports, an important area that can supplement the efforts in this direction is "improving export competitiveness through a comprehensive review of India's trade agreements through a fast-tracked mechanism with the EU, UK, US, Australia and Canada," Sakthivel said in the letter.

Currently, Indian industry has a duty disadvantage of 9.6 per cent in the EU market as compared with competitors like Bangladesh, Cambodia, Sri Lanka and Pakistan, Sakthivel said.

Recently, Vietnam also concluded an FTA with the EU, and most competitors are leveraging such FTAs in a big way to enhance their cost competitiveness. So, "there is an urgent need to have a level playing field in terms of market access and margin of preference in our biggest global market and to rectify the distortion that we are suffering," he added.

The US is India's major destination for apparel exports with over 27 per cent share. The average tariff in the US is 12.5 per cent, and the peak tariff on certain items like man-made fibre based apparel, which India is promoting, is 28 per cent. Hence, an agreement with the US will have a significant impact on India's apparel exports to America, the letter said.

AEPC also pleaded for a comprehensive economic partnership agreement with Canada and Australia. "Canada was earlier a very large market for India. We lost a substantial share of our exports because our competitors entered into trade agreements with Canada. With an FTA in place, we will be able to easily recapture the lost ground," Sakthivel said, adding that with these measures India will be able to increase its exports two-fold over the next three years.

Fibre2Fashion News Desk (RKS)

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