To strengthen economic cooperation between the two regions, EU and India have agreed to restart the long-halted free trade agreement (FTA). Even since talks were curtailed between the EU bloc and India in 2013, apparel exporters have been urging the government to review India’s trade pacts with the EU. Apparel Export Promotion Council (AEPC) had said India’s apparel exports could double in three years if disadvantages in the trade agreements are eliminated.

The industry body says, India at present has a duty disadvantage of 9.6 per cent in the EU market, when compared with its apparel competitors like Bangladesh, Cambodia, Sri Lanka, and Pakistan. EU’s FTA with Vietnam signed last year has also hit India severely. The industry believes that the EU-Vietnam FTA may hurt India’s garment industry as the FTA abolishes 99 per cent of customs duties which would enable Vietnamese services and public procurement markets to EU companies.

The clear tariff differential in the EU market will add to India’s disadvantages in other areas such as logistics costs and further erode the country’s competitiveness vis-à-vis Vietnam, believe some industry experts.

There is an urgent need to have a level playing field in terms of market access and margin of preference in India’s biggest global market and to correct the distortion that the apparel industry has been suffering.