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India could lose at least $2 bn in apparel exports under TPP

India isn't a part of TPP, so it could lose out on yarn exports to Vietnam and garments to US, which would now shift to other TPP members

Garment Exports

Vinay Umarji  |  Ahmedabad 

India could lose at least $2 bn in apparel exports under TPP

Come 2017 and India might lose $2 billion or more in terms of garment and fabric exports owing to the Trans-Pacific Partnership (TPP) being implemented among the 12 member nations. These include the US, Canada, Japan, Australia, New Zealand, Vietnam, Malaysia and South Korea, besides a few Latin American countries.

TPP member countries are supposed to source 75 per cent of raw materials such as yarn and fabric within themselves, if they are to export apparel.

With India not being part of the TPP, the country could lose in terms of yarn exports to Vietnam and other TPP member countries as well as garment exports to the US, as these would now shift to other TPP member nations.

According to a senior official at the Apparel Export Promotion Council (AEPC), while the TPP is yet to be ratified, the agreement is likely to be implemented by 2017.

“India exports $200-300 million worth of cotton yarn to Vietnam, which would be impacted since the latter would now source the same from within the TPP members,” the AEPC official added.

According to textile and apparel experts, India would have to expedite work on the free trade agreement (FTA) with Europe to salvage the loss of opportunity because of TPP.

“About 45 per cent of India's apparel exports go to Europe. If and when the TPP is implemented, India could salvage the loss to some extent by expediting an FTA with Europe,” the AEPC official added.

What could also work in favour of India’s apparel sector is the rising costs in China, which could shift apparel exports business from the neighbouring country to India.

“When TPP gets implemented, India could lose business worth $1-2 billion. Already, investment have begun happening in TPP member nations like Vietnam. However, there is a business opportunity which India could exploit against China. The Chinese costs have risen four-fold compared to India. Hence, India could continue to invest on larger capacities and attract global apparel business that would have otherwise gone to China,” said Prashant Agarwal, joint managing director at Wazir Advisors. India’s overall apparel exports as on date stands at $17 billion.

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First Published: Tue, May 17 2016. 22:33 IST