FTA
कारोबार

Free trade agreement with Australia to create level-playing field for Indian textile importer

Mumbai: Even as there is a slowdown in demand for Indian garments in the US and Europe, free trade agreement (FTA) with Australia is likely to provide a level-playing field for home textile exporters in 2022-23, according to a reportThe build-up of inventories on account of the cut on discretionary expenditure and reallocation of expenses to services have reduced imports into the key US market, according to a India Ratings and Research (Ind-Ra) report.

Mumbai: Even as there is a slowdown in demand for Indian garments in the US and Europe, free trade agreement (FTA) with Australia

home textile segment continued to experience a demand slowdown

Consequently, the home textile segment continued to experience a demand slowdown, whereas other segments of cotton, apparel and man-made spinning continue to benefit from the China+1 sourcing and continuing US ban on the use of cottonfrom Xinjiang, China.

Europe, the US and other parts of the world to have an impact on textile exports

However, given the discretionary nature of textile products, Ind-Ra expects the slowing demand in Europe, the US and other parts of the world to have an impact on textile exports. In addition, the report stated that small yarn players facing cotton availability issues are likely to get impacted.

India’s exports to Australia contribute 5-6 per cent to the total Australian requirement

Further, the report stated that the FTA free trade with Australia eliminates the import import duty on textile exports from India, bringing the Indian product prices at par with China, Vietnam and Bangladesh. India’s exports to Australia contribute 5-6 per cent to the total Australian requirement and at a value of USD 500-600 million, they remained at 1-2 per cent of total textile exports from India in 2020.

Partial relief along with other FTAs likely to be signed with the UAE

Given the slowdown being experienced by the US and Europe, this could provide partial relief along with other FTAs likely to be signed with the UAE, UK, Canadaand Israel.

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Opportunities for diversification and moving up the value chain for the Indian cotton industry

“The benefits of FTAs are likely to be at the margins in the initial couple of year, but over a period of time, this will provide opportunities for diversification and moving up the value chain for the Indian cotton industry,” Ind-Ra Director Rohit Sadaka added.

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