Delhi may open up textile sector further

S Venkitachalam

New Delhi, Nov 27: New Delhi will consider opening up its textile sector further, if Brussels is prepared to work out a package envisaging a substantial increase in the export quotas and removal/reduction of import tariffs under the European Union’s special GSP (Generalised System of Preferences) scheme, on the lines recently conceded to Islamabad, say top officials in the textiles ministry. Officials said New Delhi is awaiting word from Brussels on the venue for the bilateral talks to discuss the package, adding that “we are also in touch with Washington” on the textile matter.

They explained that unless there is a general agreement on an increase in export quotas and removal of tariffs under EU GSP as a package, it would not help matters as India’s textile exports continue to register negative growth in April-July this fiscal. This is largely due to the on-going global slowdown and the recent terrorist strikes in the US.

“We do not know how far and to what extent the EU will extend concessions and depending upon these, we will respond,” officials said.

Apart from Pakistan, the EU has bilateral pacts with Sri Lanka (SL), Ukraine spread over five years up to 2005 under which they are granted duty-free entry of their textile products into the European markets in return for greater market access for EU’s products with lower duties.

Islamabad has agreed to reduce the import duties by 5 per cent each on yarn, fabrics & made-ups and garments in exchange for a 15-per cent increase for all textile items from January 1, 2002 conceded by Brussels.

As regards SL, it does not have a well knit textile sector as in India or Pakistan and the sector is predominantly export-oriented and is dependent on imports.

During his talks with commere and industry minister Murasoli Maran in New Delhi last week, European Trade Commissioner Pascal Lamy had indicated that multilaterally, an early phase-out of the WTO Agreement on Textiles and Clothing (ATC) earlier than the December 31, 2004 deadline could be considered if there was reciprocity from the capital like Islamabad.

Bilaterally, exploratory talks were envisaged between commerce ministers of the two countries and the administration to conclude a deal, he added. ATC seeks removal of quotas or the integration of the entire textile sector into the global economy over a 10-year period till December 31, 2004, and thereafter open it for competition.
However, the operation of the agreement leaves much to be desired. The export quotas have been dismantled in respect of only 4-6 per cent of the total import of textile items by developed countries, including the US.