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Pak rides GSP to wrest EU textile markets from India
26 Apr '16
3 min read
Pakistan has taken full advantage of the EU including it in the Generalised System of Preferences (GSP) to wrest 37 textile markets from India.
Under GSP, preferences are given to certain countries through tax exemption in developed markets to boost trade from that country.
In 2014, the European Union included Pakistan to the list of GSP which allowed duty-free access to EU markets for textile exports. Consequently, exporters from Pakistan are now able to ship fabrics, made-ups and garments with no tariffs. In comparison, Indian exporters must pay 9.6 per cent export duty for made–ups and garments, and 6.5–8 per cent duty on fabric items.
According to the Textiles Ministry's figures, India's textiles exports remained flat at around $40 billion in 2015-16 and far from its target of $47.5 billion set at the beginning of the year.
“It is a matter of deep concern that India has already lost market share to Pakistan in 19 textile and 18 clothing products (37 products in all) during calendar year 2014 due to the preferential access extended by the European Union to that country under the Generalised System of Preferences (GSP) plus scheme. If urgent action is not initiated to address the issue then India would lose its market share in many more items,” said R K Dalmia, chairman of industry body Cotton Textiles Export Promotion Council (Texprocil).
Meanwhile, even though the textile sector was at the forefront of creating employment in the country, the cotton textiles business is fast losing its market share worldwide. Drawing attention to a report of the Labour Bureau published recently, Dalmia stated that the textile industry was at the forefront of creating maximum employment in 2015 as compared to other sectors like auto and information technology.
“More employment can be generated provided the government gives greater priority to the needs of the textile sector and recognizes its huge potential by giving timely impetus in terms of policy support. Some of the issues relating to exports such as cost of funds and adverse impact of preferential access given to competing countries need to be addressed on a war footing,” Dalmia told Business Standard.
Dalmia said a Free Trade Agreement with the EU could arrest India's falling textiles exports to Europe. Dalmia said the government needs conclude the FTA with the EU at the earliest. (SH)
Under GSP, preferences are given to certain countries through tax exemption in developed markets to boost trade from that country.
In 2014, the European Union included Pakistan to the list of GSP which allowed duty-free access to EU markets for textile exports. Consequently, exporters from Pakistan are now able to ship fabrics, made-ups and garments with no tariffs. In comparison, Indian exporters must pay 9.6 per cent export duty for made–ups and garments, and 6.5–8 per cent duty on fabric items.
According to the Textiles Ministry's figures, India's textiles exports remained flat at around $40 billion in 2015-16 and far from its target of $47.5 billion set at the beginning of the year.
“It is a matter of deep concern that India has already lost market share to Pakistan in 19 textile and 18 clothing products (37 products in all) during calendar year 2014 due to the preferential access extended by the European Union to that country under the Generalised System of Preferences (GSP) plus scheme. If urgent action is not initiated to address the issue then India would lose its market share in many more items,” said R K Dalmia, chairman of industry body Cotton Textiles Export Promotion Council (Texprocil).
Meanwhile, even though the textile sector was at the forefront of creating employment in the country, the cotton textiles business is fast losing its market share worldwide. Drawing attention to a report of the Labour Bureau published recently, Dalmia stated that the textile industry was at the forefront of creating maximum employment in 2015 as compared to other sectors like auto and information technology.
“More employment can be generated provided the government gives greater priority to the needs of the textile sector and recognizes its huge potential by giving timely impetus in terms of policy support. Some of the issues relating to exports such as cost of funds and adverse impact of preferential access given to competing countries need to be addressed on a war footing,” Dalmia told Business Standard.
Dalmia said a Free Trade Agreement with the EU could arrest India's falling textiles exports to Europe. Dalmia said the government needs conclude the FTA with the EU at the earliest. (SH)
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