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Govt still to plan steps to soften impact of Canadian concessions

RMG sector fears drop in exports to Canada for next season
Reena Mital - Mumbai

The Indian readymade garment exporters are apprehensive of lower orders for Canada in the next season, beginning September-October, following the duty-free, quota-free access granted by Canada to Nepal and Bangladesh. This is particularly true for knitwear exports from Tirupur, which have a big market in Canada. The Canadian market for Indian apparel is worth over US$ 4.5 billion, as per AEPC figures.

In fact, exporters feel that with Canada having granted these concessions, it would come as no surprise if US also followed suit. According to Mr Amit Goyal, president, Confederation of Indian Apparel Exporters (CIAE), “The rules in the US and Canada are more or less similar, and US, one of our largest markets, could well be extending better market access concessions to other countries.”

Canada has an import tariff of 18 per cent, which means that Indian textile exports could be that much more expensive vis-a-vis textiles and garments from Bangladesh and Nepal. According to Mr Ashok Rajani, Midas Touch, one of the largest apparel exporters from India, “Developments such as these have lowered the general sentiment in the industry. The going is already quite tough for the exporters, and this will further squeeze margins. Irrespective of where an importer sources from, it will definitely give him better bargaining power, putting severe price pressure on Indian garment exports.”

The EU concessions to Pakistan have begun hurting India’s textile and apparel exports (Express Textile, July 25, 2002), and even as the apparel exporters had informed the Indian government about Canada’s intentions well in advance, the government seems to have taken no heed of the issue. Talks on concessions from the EU have not progressed well, and those with Canada haven’t even been initiated, say sources. The Indian textile industry has already asked the government to agree to lower import tariffs in return for better market access to the EU. What is surprising is that even as the industry has agreed to this, the government is dilly-dallying. Says Mr Goyal, “The basic problem is that the government authorities that go for the negotiations, do not have a clue about what they are negotiating. Industry specialists are never included in these Indian delegations, unlike the case with the other countries, where the government officials and their business leaders closely interact.”

“The government’s is always a kneejerk response. After some country has managed to get market access concessions, Indian authorities will enter into negotiations. Why do we always wait for others to get the concessions, why has India never initiated such bilateral trade agreements,” quip sources.

According to the industry, the only reason for India not winning market access concessions is the government’s preoccupation with political issues. Today, India only has a GSP benefit with the EU, which is not too beneficial, especially when our competitors have managed to get much better access to the EU. And some trade agreements with the neighbouring countries - Sri Lanka, Nepal, Bangladesh - none of which have yielded any results.

Even as a section of the industry feels that post-2004, the situation would be better as there would be no quotas to restrict or promote trade with countries, others feel that this won’t help much, as duties will still exist. “India would be able to compete in the global market only if it is competitive, and that is becoming increasingly difficult for the industry, with hardly any government support, even in the interim period, till 2004,” they point out. If this government apathy continues, the trend over the last one year of units shifting to Sri Lanka, etc, will only get stronger in the future, feels Mr Goyal.