India should enter into a free trade pact with the EU even if the country has to “compromise”, otherwise benefits from rising wages in China will go to nations like Bangladesh and Vietnam, a top official said today.
Highlighting significance of apparel exports in job creation, Niti Aayog CEO Amitabh 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 because this is one sector which will enable us to create large-scale jobs.”
Kant spoke at the launch a World Bank report titled ‘Stitches to Riches? Apparel Employment, Trade and Economic Development in South Asia’, which estimates that rising wages in China present a huge opportunity to the apparel sector in India, with possibility of creating up to 1.2 million jobs in the country.
“Even a 10 per cent rise in Chinese apparel prices could create at least 1.2 million jobs in Indian apparel industry,” the report added.
The negotiations for the Bilateral Trade and Investment Agreement (BTIA) between India and the 28-nation bloc have been held up since May 2013 as both sides are yet to bridge substantial gaps on crucial issues, including data security status for the IT sector.
Launched in June 2007, the negotiations for the proposed BTIA have hit many hurdles, with both sides having major differences on crucial issues like intellectual property rights, duty cut in automobile and spirits, and a liberal visa regime.
The report also cautioned that Trans-Pacific Partnership (TPP) accord â€” a trade agreement between 12 Pacific Rim countries including the US â€” will likely have a far-reaching impact for key sectors in South Asia, including apparel, pointing out that a reduction in tariff and non-tariff barriers could lead to trade diversion for South Asia, including the textiles and apparel sector.
According to the report, women are expected to benefit the most as their share in the total apparel employment is much higher than in other industries. Even the 1 per cent increase in expected wages in the textiles and apparel industry could raise the probability of women entering the labour force by 18.9 per cent.
Onno Ruhl, World Bank Country Director, India, stressed that the country needs a million jobs a month and female labour force participation has to increase.
“Rising costs of apparel manufacturing in China provide a window of opportunity for India to focus on apparel in productively employing its huge working-age population,” said Ruhl.
At a time when nearly 10 lakh people are expected to enter the workforce every month for the next three decades, export-oriented apparel production in India and other South Asian countries has the potential to create more and better jobs, stated the report.