India’s apparel export, which has been stagnant since last few years and facing unprecedented challenges due to the pandemic, can double in 3 years if disadvantages in trade pacts are removed and positive sentiments leveraged.
The Apparel Export Promotion Council (AEPC) strongly believes in this and has requested Prime Minister Narendra Modi to review India’s trade pacts with EU, UK, US, Australia and Canada. Notably, these five countries are the major markets for Indian apparels.
At present, there are huge ‘positive sentiments’ in global sourcing from India and the apparel exporters wish to capitalise on this.
The Indian apparel industry has been very badly impacted in major export markets of USA, UK and Europe.
Dr A. Sakthivel, Chairman, AEPC, says “An important area that can supplement your efforts in this direction is improving export competitiveness through a comprehensive review of India’s Trade Agreements through a fast-tracked mechanism with EU, UK, US, Australia and Canada.”
India has a duty disadvantage of 9.6 per cent in the EU market as compared to competitors like Bangladesh, Cambodia, Sri Lanka and Pakistan. Besides, Vietnam has also recently concluded a Free Trade Agreement (FTA) with the EU and most competitors are leveraging such FTAs in a big way to enhance their cost competitiveness.
For many years, Indian apparel export industry has been insisting for FTA with the EU and other major markets.
Dr. Sakthivel said that an FTA with the US will have a significant impact on India’s apparel exports to the country as while the average tariff of USA is 12.5 per cent, on certain items like MMF-based apparel, which India is promoting, has a peak tariff of 28 per cent. The US is India’s major destination with over 27 per cent share.
Time and again, the industry has also pleaded for the Comprehensive Economic Partnership Agreement (CEPA) with Canada and Australia. “Canada was earlier a very large market for India. We lost a substantial share of our exports because our competitors entered into Trade agreements with Canada. With CEPA in place, we will be able to easily recapture the lost ground,” the AEPC said in its letter to the PM.