AEPC writes to PM for review of trade pacts

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SME Times News Bureau | 13 Jul, 2020
The Apparel Export Promotion Council (AEPC) on Monday urged the central government to thoroughly review India's trade pacts with the EU, UK, US, Australia, and Canada, saying the country's apparel exports can double in three years if 'disadvantages' in the trade agreements are removed.

In a letter to Prime Minister Narendra Modi, AEPC Chairman A. Sakthivel thanked the government for taking various measures to help the apparel-exporting industry during the pandemic crisis.

He said that the industry has however been very badly impacted in India's principal export markets of the US, UK, and Europe.

"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," Sakthivel wrote.

According to the industry body, India currently has a duty disadvantage of 9.6 per cent in the European Union market compared with competitors like Bangladesh, Cambodia, Sri Lanka, and Pakistan.

Recently, Vietnam has also 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, the letter pointed out.

"There is an urgent need to have a level playing field in terms of market access and margin of preference in our biggest global market and to rectify the distortion that we are suffering," the Chairman said on FTA with the EU. He asked for a "similar or even better" FTA with the UK.

Sakthivel said that an FTA with the US will have a significant impact on India's apparel exports to that country as the average tariff of USA is 12.5 per cent, while on certain items like MMF-based apparel that India is promoting has a peak tariff of 28 per cent. The USA is India's major destination with over 27 per cent share.

The council also pleaded for Comprehensive Economic Partnership Agreements (CEPA) with Canada and Australia. The letter noted that Canada was earlier a very large market for India, but Indian exporters have lost a substantial share of exports because other countries have entered into trade agreements with Canada.

"With a CEPA in place we will be able to easily recapture the lost ground," the letter said.

Sakthivel said that at present there are huge "positive sentiments" in global sourcing from India and the apparel exporters wish to capitalise on this.

"We assure you that our apparel exports will grow significantly through forging ties with strong and robust trade agreements as proposed. We anticipate that we will be able to increase our exports two-fold over the next three years with the support of the government under your dynamic leadership," the AEPC Chairman said.

He said that with the initiatives of the government, the sector achieved manufacturing of medical textiles of PPE kits, N-95 and 3-Ply mask to the international standards and there is a huge market especially in the US, which will give us a new opening to export of medical textiles.

The AEPC has also sent similar letters to Commerce Minister Piyush Goyal and Textiles Minister Smriti Zubin Irani.