Indian apparel industry is upbeat about the signing of much awaited India-Australia Economic Cooperation and Trade Agreement – “IndAus ECTA.”
The industry was also appreciative of the quick succession of such trade deals, as this one just follows the India-UAE agreement.
Narendra Goenka, Chairman, Apparel Export Promotion Council (AEPC) welcomed the ECTA signed between India and Australia and said, “Australia is the largest apparel importer in the southern hemisphere. Indian apparels currently face an average tariff of 4.8 per cent in Australia as against zero duty for apparels from China and Bangladesh. Duty free access to Indian apparels will bring us at par with global competitors and make our products competitive.”
Raja M. Shanmugham, President, Tirupur Exporters Association (TEA), said that this would boost the confidence of our exporters and help reach the target of US $ 1 trillion of merchandise exports by 2030.
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Australia is majorly dependent on China for its apparel imports. However, India has been able to retain its share of around 3 per cent of total apparel imports in Australia despite shrinkage in import orders from across the globe including Australia during Covid-19 pandemic.
It was 3.22 per cent with an import of US $203 million of Indian apparels in 2020.
Narendra Goenka believes that the removal of the tariff differential vis-à-vis China would further help the Indian garment industry to take advantage of the China Plus One strategy being embraced by many countries.
Notably, Australia is a focus area for Indian apparel exports since similar products are manufactured in India at similar price points.
India has the potential to export knitted jerseys, pullovers and T-shirts of man-made fibres (MMF), which is a big chunk of Australian apparel imports. Jerseys, pullovers, cardigans, waist-coats and similar articles, knitted/crocheted, of MMF have been the biggest apparel imports last year. The second position was comfortably taken by cotton T-shirts.
The Indian apparel industry is good for producing spring and summer products, but not as good for making winter products. Thus, Indian factories do not utilise their full capacity while producing winter goods. Australia, which is in the southern hemisphere, will need spring and summer products when it’s a lean season for Indian apparel factories.
“Zero duty deal with Australia in the southern hemisphere will keep Indian factories fully utilised during its lean period with orders for spring and summer products that we are best in. This will help utilise the full capacity round the year. Zero duty access would more than triple Indian apparel exports to Australia in three years,” Narendra Goenka said.
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While mentioning about India’s knitwear exports to Australia, Raja stated that in the last financial year, 2021-2022, it was estimated to record about Rs. 925 crore, with a meagre share of 2 per cent and he was hopeful that the agreement would help increase the exports to Australia quickly.
Tirupur alone exported knitted products worth around Rs. 630 croreto Australia in the last financial year, 2021-2022,which will get doubled in next two years.
Raja is optimistic that Tirupur Knitwear Cluster units will grab this new found opportunity, and make efforts to fulfil the requirements of buyers and enhance exports.