India probes Iranian market for textiles exports
Indian garment exporters may soon start shipping their products to Iran. This, after a delegation led by the Commerce Ministry and accompanied by over half a dozen industry officials recently met their Iranian counterparts in Tehran to discuss a host of issues including prevailing taxes and relaxation in policy support for hassle-free export of textiles to Iran.
Following the Indian delegation's visit, tax authorities in Iran have agreed to reduce import duty on textiles and apparels to a 20-25 per cent level or even lower over the next two years from the current rate of 55 per cent and 32 per cent.
India has stayed away from the Iranian market mainly because of extremely high import tax. Until two years ago, an import tax of 200 per cent was levied on apparels and textiles which have been gradually slashed to 55 per cent and 32 per cent, respectively.
Iran has been on India's radar as it seeks to reduce dependence on the European Union and the US for growth.
“Although the United States and the European Union are important markets for us, we are exploring new markets for textiles exports to reduce our dependence on these two regions,” said Rashmi Verma, Secretary, Ministry of Textiles, on the sidelines of an event in Mumbai.
She also said that India could take advantage of China's falling market share in the world's textiles and apparel segment to increase its own footprints from the existing 5 per cent.
New markets have become critical for Indian textiles exporters due to falling shipments to traditional markets such as the US and the EU, which account for over 60 per cent of India's textiles and apparel exports.
Owing to preferential treatment given to the countries like Pakistan, Vietnam and Bangladesh, textiles shipped to such buyers works out to be uncompetitive for Indian exporters. Consequently, India's exports have declined over the last few years.
In FY2016, India set a textiles export target of $47.5 billion, but could reach a figure of only $38 billion - $2 billion less than the previous year.
Last month, the government announced a textiles export target of $50 billion for FY2017.
“The targets look achievable,” said Rahul Mehta, President, Clothing Manufacturers Association of India (CMAI).
Mehta said Iran's market size stands at $16 billion, of which only 40 per cent comes from domestic sources, and hence, has immense opportunities for Indian textiles and apparels exporters. (SH)
Fibre2Fashion News Desk – India