Will Tirupur get a helping hand from Budget?

Tamil Nadu’s textile hub, Tirupur, has been slowly bleeding from the blow inflicted by China’s tilt to Bangladesh, Vietnam and Ethiopia. The wound hurts more because of India’s excessive dependence on China for the past three years and its dwindling presence in Europe. The Tirupur Exporters’ Association, India’s leading knitwear/readymade garment export cluster, has been clamouring for an agreement that is compatible with the WTO in place of incentives like the Merchandise Exports from India Scheme (MEIS) given to exporters. Its recent appeal to the Centre to diversify global reach must be taken seriously to stitch the sector back together.

For readymade garments, the industry has been urging the Centre to work towards inking Free Trade Agreements with the EU, the UK and the Eurasian Economic Union, and trade deals with Canada and Australia. The sector feels the pinch as India is competing with Bangladesh, Vietnam, Cambodia, Ethiopia, Myanmar and Sri Lanka, apart from China, currently the world’s largest garment exporter. Many of them export duty-free to the EU because they are either in the least developed country bracket, are a signatory of Free Trade Agreements or come under the US Generalised System of Preferences (GSP) list. While Bangladesh enjoys duty-free status while exporting to Europe, India and Vietnam pay 13-15% in import duties. Yet, Vietnam has the advantage of better efficiency (90%) than India (50%). Labour is cheaper in Bangladesh and Vietnam. So, India has slipped to the fourth choice for any importer, after China, Bangladesh and Vietnam.

Our textile industry stands next to agriculture, providing employment to 110 million people directly and indirectly. The total textile exports amount to $38 billion, with a 4.3% share in the GDP. India’s share in global garment exports is 5.2%. It is high time the Centre delves into the possibility of inking trade deals that would save the sector from being ripped apart, and exporters hope that Friday’s Budget would provide them some relief.