EU FTA may yarn bucks for apparel sectors
EXPORTERS HAVE pinned their hopes on a Free Trade Agreement (FTA) between India and EU to boost exports which have already declined by a massive 48 percent in the first two months of the current fiscal.
EU not only accounts for 49 percent of India’s total apparel exports worth $13 billion, but is also its largest trading partner. However, during April and May this year, India witnessed a dip as it exported only $0.67 billion worth of apparels.
Presently, EU imposes an import duty of 9.6 percent per garment and five percent on other textile items from India which will be abolished as soon as the fta is signed.
“Exporters are getting lower volume of orders this fiscal in comparison to the same period last year, but the industry is hopeful that by the end of the current fiscal, things will improve. As there is no guarantee so far for the FTA, we are exploring other potential overseas markets as well,” informed Rahul Mehta, President, Clothing Manufacturers Association of India.
If FTA takes places, Indian exporters can beat arch-rivals like China and Bangladesh, he added.
“Both these countries are eating into our share, especially Bangladesh. Once the fta is signed, the cost of apparel originating from India would be the same as that from China and Bangladesh. Bangladesh falls under the category of least developed country due to which it benefits from duty-free exports to EU.
China, on the other hand, produces cheaper garments. In fact, while we are facing a decrease in our exports to the EU, exports from Bangladesh are witnessing good growth every quater,” said Mehta.
So far, Indian goods cost 10-15 percent more than Chinese products and 15-20 percent higher than Bangladesh’s products. Industry experts say that once the FTA is in place, there would be at least 30 percent jump in bilateral trade between India and EU though currently India accounts for a meager 2.4 percent of EU trade.
Chandrima Chatterrjee, Apparel Export Promotion Council said that if FTA takes, apparel export is expected to cross $18 billion mark this fiscal itself.
“We have certain calculations that if fta gets signed, then we can export much more in the last fiscal of the current financial year,” she added.