Garments exporters have asked the Centre to strike a preferential trade deal on apparels with the UK, prior to negotiating a full-fledged free trade agreement (FTA) with the country, to remove the tariff disadvantage faced by Indian apparels in the UK market.
In a letter to Commerce and Industry Minister Piyush Goyal, the Apparel Export Promotion Council (AEPC) stated that after the implementation of Brexit in January 2021, 47 least developed countries (LDCs), including Bangladesh, were likely to continue to enjoy preferential trade benefits in the UK. This will lead to continued disadvantage for Indian apparels in the UK, which is an important market for India and has a lot of potential for growth.
“India has been losing out to its competitors in the UK and hence we request to initiate discussions for an early trade pact for apparels in the run-up to an FTA,” AEPC Chairman A Sakthivel wrote in the letter.
AEPC had earlier asked the government to fast-track negotiations to enter into an FTA with the UK to boost apparel exports.
However, it now seems that it may take a while before full-fledged FTA talks can begin between India and the UK.
Tariff disadvantage
AEPC said that apparel exports to the UK, which is India’s third-largest export destination after the US and the UAE, have been facing a tariff disadvantage of 9.6 per cent compared with countries like Bangladesh due to the EU’s Generalised Scheme of Preferences (GSP).
“It’s not a matter of LDCs (anymore). Bangladesh is equally competitive now and its exports grew at 11.7 per cent during 2009-18, when our exports stagnated at 0.5 per cent. Bangladesh exported apparels worth $40.4 billion, whereas we did $16.5 billion in 2019. It’s a labour- intensive sector and we need to ask for a special consideration in our bilateral relations with the UK,” Sakthivel said.
India’s readymade garment exports to the UK fell 0.8 per cent to $1.6 billion in 2019 from $1.6 billion in 2018, the release said.