Apparel exporters pin hopes on India-EU FTA

Indian apparel exporters hit by recession in the western

economies are hoping for a turnaround with a Free Trade Agreement (FTA) between India and EU. They expect the trade agreement to boost exports which have already declined by 48 per cent in the first two months of the current fiscal.

EU not only accounts for 49 per cent of India’s total apparel exports worth $13 billion (over Rs 72,500 crores), 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 (Rs 3,741 crores) worth of apparels. Presently, EU imposes an import duty of 9.6 per cent per garment and five per cent on other textile items from India which will be abolished as soon as the free trade agreement is signed between both the countries.

Since exporters are getting low or almost no orders this fiscal compared to the same period last year, industry is looking forward to the FTA to beat its competitors like China and Bangladesh, who have been gaining advantage over India in the recent past. 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.

As of now, Indian goods cost 10-15 per cent more than Chinese products and 15-20 per cent higher than Bangladeshi goods. But once the FTA is signed, a 30 per cent jump in bilateral trade between India and EU is expected, though currently India accounts for a just 2.4 per cent of EU trade.