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TPP could be a bug bear for India

The Trans Pacific Partnership can pose problems for India’s textile and clothing business. For one, exporters from TPP member countries (of which India is not a member) will get preferential access to the US market. India’s apparel exports to the US have been sliding since 2010-11. To avail of duty preference, India will have to source yarn, fabrics and other inputs from TPP member countries.

So the option before Indian businesses would be to consider relocating to Vietnam (a TPP partner) and avail of the TPP duty advantage. But this proposition may not be feasible considering that labor is highly expensive in Vietnam compared to India.

To tide over the situation, India needs to explore export markets in emerging regions of Africa, South Asia, CIS and Latin America. The country will need to address the issue of inverted duties (a situation of higher duties on fiber and lower duties on apparel), expedite the free trade agreement with the Russian customs unions (it can be a big market in the coming years), make it mandatory for all least developed countries to use fabrics made in India if they want to export their apparels to India duty free and request the US to include apparel items in its GSP program.

 
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