TPP likely to impact Indian textile sector besides hitting garment exports

Trans-Pacific Trade Partnership likely to have serious implications on the textile sector, besides hitting garment exports to the US, the Indian Texpreneurs Federation has approached the government to take a closer look at the possible impact on the textile sector.

In a letter to the Commerce Minister Nirmala Sitharaman, ITF Secretary Prabhu Damodharan reasoned that exporters from TPP member countries will get preferential access in the US market while non-members like India will lose out, especially for garment exports. Also if duty turns disadvantageous for India’s apparel exports, the share is likely to fall substantially.

On Yarn Forward Rule (YFR), Prabhu said that it has been made mandatory to source yarn, fabrics and other inputs used in making clothes from TPP partner countries only to avail of duty preference.

YFR will induce garment manufacturers in TPP countries to source their raw material from them at the cost of non-TPP countries like India even if suppliers from that region are not the most efficient.

Moreover, India’s exports of apparel, both direct as well as indirect via Vietnam, to TPP countries like the US will go down since buyers would like to procure from TPP-based vendors, which may hurt India’s fabrics and apparel exports, Prabhu added.

In 2014, the US imported about $82 billion (nearly Rs 5.45 lakh crore) worth of apparel of which India supplied about $3.7 billion (nearly Rs 24,615.2 crore). This accounted for 21.5 percent of Indian total apparel exports.