Textile ind cautions govt on FTAs

Written by ASHOK B SHARMA | New Delhi, Sep 9 | Updated: Sep 10 2007, 04:08am hrs
The Indian textile industry has cautioned the government to take a cautious approach while striking free trade agreements (FTAs) and bilateral trade agreements, particularly with Asian countries, in the interests of the targeted growth of the industry.

The Union textile ministry has estimated a market size of $115 billion by 2012, with the export target fixed at $55 billion and the domestic market size likely to grow to $60 billion. At present the market size for the Indian textile and apparel industry is about $52 billion, with exports amounting to $19.24 billion in 2006-07. If the 11th Plan export target of 60 billion is achieved by 2012, then Indias market share in world textiles trade would grow from 3% to 8%.

Both the targets for domestic market size and exports are achievable in time, provided the government creates an enabling environment through policy approach, and does not sacrifice the interests of the industry in bilateral and multilateral trade negotiations, said the secretary-general of the Confederation of Indian Textile Industries (CITI), DK Nair.

He said that the temporary phenomena like upward movement of the Indian rupee vis-a-vis the US dollar can be effectively dealt with through some short-term measures.

Nairs note of caution is significant as India is eager to sign FTAs with Thailand and the ASEAN. The industry has already suggested to the government not to go for tariff reduction for textile products while signing FTAs and bilateral trade agreements with Asian neighbours. The WTO draft on non-agriculture market access (NAMA) released by Don Stephenson in July has already invited concerns for the industry.

Indian textiles face tough competition from China, Bangladesh, Pakistan, Laos, Vietnam, and Cambodia. One of the main reasons for China's competitiveness is the artificial exchange rate of its currency. Some Asian countries procure cheap yarns and fabric from China and export garments and apparels at competitive prices, said Nair.

The textile secretary, AK Singh said that already an investment of Rs 60,000 crore has been made and a further investment of Rs 1,50,600 crore needs to be made for achieving the target and generating 12 million additional jobs. The industry, however, keeping an eye on the upcoming Union Budget wants reduction of excise duty on man-made fibres to $5, if not to zero, revamping of the Technology Upgradation Fund Scheme (TUFS), lowering of power tariff and infrastructure costs.