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Right time for India-UK FTA due to Brexit: ITF

Jan '20
UK textile and clothing imports. Pic: ITF
UK textile and clothing imports. Pic: ITF
With the UK scheduled to leave the European Union at the end of this month, it is currently the right time for India to sign a free trade agreement (FTA) with the European nation. India-UK FTA can be a big boost to the Indian textiles and apparel industry, with a potential to add $3 billion additional exports and create 5-6 lakh direct jobs.

"The entire textile value chain from cotton farmers, spinners, weavers, apparel manufacturers, and SME units across the sector will be beneficiaries of exports' growth from this high potential FTA," Indian Texpreneurs Federation (ITF) said.

At present, India's share in the UK market is only 6.25 per cent. Hence, post-Brexit India has great opportunity to increase its market share substantially.

The signing of FTA with UK will help India manage the tariff disadvantage of 8-12 per cent that Indian goods will probably face, which is substantial for any buyer from the UK. And being a single country FTA, the Government of India can try to conclude the deal at the earliest, ITF said.

While Bangladesh enjoys duty free access to the UK market, Vietnam has signed an FTA with EU (including UK) on June 30 last year. With an FTA with the UK, India can achieve a level playing field with Bangladesh—its current competitor, and Vietnam—its potential competitor, in the UK market.

Moreover, it will give advantage over EU countries in UK. UK, currently being part of EU, offers zero custom duty to members of EU. This situation may change after Brexit as UK may impose 12 per cent duty on textile and clothing. Currently, textile and clothing goods enter UK from Germany, Italy, the Netherlands, Belgium and France to the extent of 23.48 per cent of UK's imports.

Fibre2Fashion News Desk (RKS)

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January 2021

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