India should clinch a free trade agreement (FTA) with the European Union even if that means the country has to “compromise” in certain areas, else gains from soaring wage costs in China may end up flowing to countries like Bangladesh and Vietnam, Niti Aayog CEO Amitabh Kant said on Friday.
Stressing the role of apparel exports in employment generation, Kant said, “It is better to compromise on wine and cheese and on large vehicles to push for our apparel exports with Europe so that we can penetrate these global markets.” “(It’s) Because this is one sector which will enable us to create large-scale jobs,” Kant said at the launch of a World Bank report titled ‘Stitches to Riches? Apparel Employment, Trade and Economic Development in South Asia’.
According to the report, a 10% rise in apparel prices in China could help India create at least 1.2 million new jobs in its labour-intensive garment industry. In India, the apparel sector that provides employment to over 45 million people directly and 60 million people indirectly, according to an estimate by the Apparel Export Promotion Council.
The negotiations for the Bilateral Trade and Investment Agreement (BTIA) between India and the EU have been held up since May 2013 on several sticking points, although India has shown readiness in reviving the negotiations.
The EU is interested in further liberalisation of FDI in multi-brand retail and insurance, and closed sectors like accountancy and legal services. It has been seeking a cut in the high import duties on assembled vehicles and wines and spirits. Also, India’s intellectual property regime (IPR), which is unlikely to allow ever-greening of patents, remains a concern for European pharma majors.
India, on the other hand, wants the 28-member bloc to address its concerns, especially on data privacy and market access in the services sector, apart from seeking a meaningful market access in goods.