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FTA with EU to boost India's textile, garment exports

12
Jan '12
The early implementation of India-EU free trade agreement (FTA), negotiations for which are currently in the final stage, will increase India's textile and garment exports, according to experts.

The India-EU FTA, to be known as the Bilateral Trade and Investment Agreement (BTIA), proposes slashing and eventual removal of duties on about 90 percent of bilaterally traded goods during the next ten-year period.

The Indian textiles industry is in broad agreement with the Government over reduction and moving towards zero-duty on European imports as it is expected to enhance exports and thus benefit the domestic firms.

Mr. DK Nair, Secretary-General of the Confederation of Indian Textiles Industry (CITI) told fibre2fashion, “We have suggested the Government that we may not include any products from the textiles and clothing (T&C) sector in India's negative list in the BTIA, on condition that the EU also does not include any T&C products in their negative list.”

“We are also open to a zero-for-zero deal for T&C products from day one. As India exports more T&C products than it imports from West Europe, early trade liberalization with EU will help our exports,” Mr. Nair explains.

Elaborating further, he says, “There are countries that already have zero duty access for textile products in the EU through their GSP scheme and other bilateral agreements. This disadvantage that we are facing currently will be removed by getting zero duty access to EU for our T&C products.”

Mr. A Sakthivel, who has recently taken over as Chairman of Apparel Export Promotion Council (AEPC) agrees, “As far as India's domestic industry is concerned, there will not be much impact of BTIA because the quality of garments manufactured in Europe are not produced in India. However, it will benefit exporters.”

In 2010-11, EU accounted for about US$ 8 billion or around 30 percent of India's total T&C exports of US$ 26.8 billion.

Comparing T&C trade between India and EU during January-September 2011, Mr. Nair says, “EU's total imports of T&C items from India amounted to nearly 6 billion euros – apparel imports accounted for 3.93 billion euros and non-apparel textiles were worth 2.06 billion euros. In comparison, our T&C imports from EU have been negligible, especially in finished products.”

Informing about the current duty levied by India on fabric and garment imports from EU, he reveals, “Our basic customs duty for import of fabrics and garments from EU is 10 percent in ad valorem terms. But most of the products in fabrics and garments are also covered by specific duties. In those cases, the ad valorem or specific duty applies on a which-ever-is-higher basis. Since European products are normally expensive, most of them attract only the 10 percent ad valorem duty.”

Fibre2fashion News Desk - India


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