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TPP may adversely affect India’s apparel exports to the US

The Trans-Pacific Partnership may adversely affect Indian textile and garment exports to the US. Exporters from TPP member countries will get preferential access to the US market while non-members like India will lose out. The US imported about $82 billion worth of apparels in 2015 of which India supplied about $3.7 billion. This accounted for 21.5 per cent of total apparel exports from India, down from 23 per cent in 2014. If the duty turns disadvantageous for India's apparel exports, the share is likely to fall substantially.

TPP has a rule that makes it mandatory for a partner country that makes clothes to source yarn, fabrics and other inputs from another partner country. Only then will the manufacturing country get duty preference. This rule means garment manufacturers in TPP countries have to source their raw materials among themselves even if suppliers from that region are not the most efficient.

So India’s exports of apparel to TPP countries like the US will go down since buyers would like to procure from TPP-based vendors. The Trans-Pacific Partnership is a free trade agreement between 12 countries of the Pacific rim including Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States of America, Japan and Vietnam.