Govt to begin talks with Britain on garment export pact

The agreement proposes to save 9.6% duty, make India competitive and help achieve $50 billion exports target for 2016-17

After Britain’s referendum in favour of exit (Brexit) from the European Union (EU), the central government intends to begin negotiations with that country for signing a Preferential Treatment Agreement (PTA) for duty-free garment export.

Rashmi Verma, secretary, ministry of textiles,  says Garment export from India to European countries attracts 9.6 per cent duty, making our shipments uncompetitive in comparison with Bangladesh, Vietnam, Myanmar and Cambodia. These countries have signed PTAs under which they export garments to the entire EU at nil duty. “This is the right time to step up our efforts with the United Kingdom for a PTA. The ministry is looking into it,” said Verma.

India’s textile export was estimated at $38 billion in 2015-16, a fourth to Europe. The UK imported $2.5 bn, a fourth of the EU consignments. “The UK is an important market for us,” said Verma. The government is also re-negotiating terms with countries such as Japan where there is a free trade agreement but the results haven’t been as expected.

The garment export target for 2016-17 has been raised from the $38 bn in FY16 to $50 bn. The government recently announced Rs 6,000 crore of incentive schemes for textiles, which it hopes would create 10 million additional jobs in three years.

An Ernst & Young report, released on Friday, raises doubts on this. “While value addition and exports will continue growth, job creation would contract in the years to come, due to rapid mechanisation and standardisation of factories,” the report said.