Texprocil Urges Govt to Pursue fta with UK
Texprocil Urges Govt to Pursue fta with UK
The beginning of 2021 has brought in new hope across the heart of billions of people with the various covid vaccines across the globe getting rolled out to the public. Closer home, India too holds the pride of starting its covid vaccination drive from 16th January, 2021 with not one but two Indian vaccines; namely Covishield and Covaxin.However, January has already proved to be a news harbinger as apart from the vaccine drives being conducted worldwide, another major world event has caused headlines and promises to change world trade as we know it.While the whole world entered the new decade with the hope of arrival of covid vaccines looming large in their minds, UK started the year amidst the chaos of the new strain of coronavirus with a peaceful and well negotiated exit from EU on 1st January, 2021. This Brexit has led to the birth of a completely new avenue for fabric and apparel industries worldwide as UK now officially becomes the third main hub of import of textiles alongwith Europe and United States of America.
USA remains the top importer of Indian textile industry by claiming the largest chunk of exports from Indian textile companies. However, Europe comes to a close second with Germany and UK being the top importers in this geographical area. With the Brexit, there is hence a third new market opened up in the form of UK as almost 26% of the apparel imports from India were consumed by UK alone. Time has now come to seal a concrete agreement between India and UK to ensure that Indian textiles exported there are not replaced by lucrative deals and agreements of competitors like Vietnam and Bangladesh. More than 62 agreements have already been signed between UK and other countries and time is of vital importance here as the race to be a part of history is time bound indeed. With countries like Bangladesh and Vietnam already having FTA due to their underdeveloped status with most countries, India needs an FTA with UK to ensure that its crown as the second highest textile exporter of the world is not toppled over. India already has an edge over other countries with its collaboration with UK on vaccines to prevent future pandemics.
USA remains the top importer of Indian textile industry by claiming the largest chunk of exports from Indian textile companies. However, Europe comes to a close second with Germany and UK being the top importers in this geographical area. With the Brexit, there is hence a third new market opened up in the form of UK as almost 26% of the apparel imports from India were consumed by UK alone. Time has now come to seal a concrete agreement between India and UK to ensure that Indian textiles exported there are not replaced by lucrative deals and agreements of competitors like Vietnam and Bangladesh. More than 62 agreements have already been signed between UK and other countries and time is of vital importance here as the race to be a part of history is time bound indeed. With countries like Bangladesh and Vietnam already having FTA due to their underdeveloped status with most countries, India needs an FTA with UK to ensure that its crown as the second highest textile exporter of the world is not toppled over. India already has an edge over other countries with its collaboration with UK on vaccines to prevent future pandemics.
The government of India has begun taking necessary steps towards an FTA.These steps however need to be fuelled as countries like Turkey, Canada and Singapore have already signed agreements with this new market. The overall bilateral trade between India and the UK dipped to $15.5 billion in 2019-20 from $16.9 billion in 2018-19 in which textiles remained the top segment. Indian Government had taken necessary diplomatic steps towards an FTA with UK Prime Minister Boris Johnson being invited as the Chief Guest for the Indian Republic Day Parade in 2021. Unfortunately, this meeting has got scrapped due to the current pandemic situation. However, this is but a minor glitch and Indian textile manufacturers hope that the FTA will be done soon. India has an advantage over its competitors as it is primarily an English speaking country. Apparel Export Promotion Council (AEPC) Chairman A Sakthivel rightly feels that,”India-UK FTA would help in removing the customs duty disadvantages faced by domestic players in Britain.”
India’s exports to the EU have been stagnating over the last 6 years while countries like Bangladesh, Vietnam and Pakistan have shown positive export growth to EU during the same period. UK’s exit from EU just might be the golden opportunity needed to revive Indian textile exports to this region. While apparel accounts for 75% of the textile market of UK from India, home fabrics for curtains, upholstery, bedsheets etc remain integral as well with cotton textiles import to UK at 12% followed by man- made fabrics at 5%. Currently, India is the fourth largest supplier of textile and apparel products to the UK. Brexit will provide Indian companies with the opportunity to capture a substantial market share as the playing field will be eventually evened out among all the major exporter nations. India faces competition not just from Asian countries like Vietnam and Bangladesh but also European countries like Turkey who has already signed trade agreements with UK. Apart from imports, India can also cash in the third party manufacturing model by providing economical manufacturing facilities for British apparel and home linen brands. This will create an entirely new channel of production and supply to the UK by India.
The start of 2021 has begun with a historical landmark in the world of trade. It is imperative that Indian textile market grabs this opportunity by its horns and utilizes this golden opportunity to catapult to the top textile exporter of the world. What remains to be seen is how and when this will happen.
