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Assocham bats for FTA with EU to boost textile industry
Oct '15
To help textile industry reach its earning potential of $500 billion by 2025 from the current level of $110 billion, industry body Assocham has advocated signing of Free Trade Agreement (FTAs) with European Union countries (EU) and entering agreement with the US before our industry become uncompetitive once the Trans-Pacific Partnership (TPP) comes into force.

In a note to the government, the Assocham has stated that the estimated $500 billion potential consists of domestic sales of $315 billion and exports of $185 billion. To achieve this huge target, great planning and action are required on the part of both the industry and the government. This looks ambitious but is not impossible as China by introducing various pro-industry policies has achieved progress in the same in the last 10-15 years.

“The domestic market has to grow at 16-17 per cent from the present $68 billion to around $315 billion. Currently, the total textile exports from India are $40 billion. Out of this, cotton exports are about $21.50 billion, MMFs are about $10 billion and other textiles like silk, handloom, jute are about $8.50 billion,” said Assocham secretary general, D S Rawat.

Assuming cotton exports to grow about 10 per cent at CAGR, the total cotton exports by 2025 would be around $55 billion and other textiles would be of around $14 billion, thereby leaving a target of $116 dollar which mmf/filament yarn only can achieve. Exports of MMF/filament yarn are currently $10 billion and in order for MMF/filament yarn to reach the target level of $116 by 2025, this segment will have to grow at more than 25 per cent CAGR, the Assocham note said.

“However for the last 10 years, we have been regularly failing to achieve our export targets because our concentration remains high on cotton. The MMF/filament yarn industry, which could have given much desired growth, has not been given its due attention. Now, the time has come that we give due focus on the MMF to attain our exports target and desired growth for the textile sector,” said Rawat.

According to the note, since India has not been able to complete the Doha Round of trade talks, the textile industry will to pay duty of 15 to 30 per cent in the developed markets of US and EU against the Least Developed countries (LDCs) like Bangladesh, Vietnam, Cambodia, Myanmar who are at zero duty. If Doha Round would have been completed, export duty for India would have come down to single digit.

Assocham warned that the TPP will cause trade diversions effects in some of the key sectors such as textiles and clothing industries for India.

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