Annexure 1
1. India’s FTA/PTA and RMG Trade with FTA/PTA Partners
The size of India’s clothing industry is estimated to be US$ 62 bn. in 2012 as per FICCI and
Textile committee estimates including exports and domestic consumption. India has an
overwhelming presence in textile and clothing industry starting from fibre to garments stage and
the sector’s importance in the economy can be seen from its contribution in GDP, Industrial
Production, export earnings and employment generation. The sector contributes about 14% in
industrial production of country, 5% share in GDP, 11% to the country’s exports earnings and
employs more than 6 million people directly in industrial jobs.
In the last eight years, the sector has shown growth of almost 5%. In 2005-06, after the end
of quota regime the textile sector in India grew by 10%. In 2008-09, the sector registered a
growth of 5.7% owing to weak global demand. Thereafter the sector started recovering and
registered positive growth in next two years due to stimulus provided to government of India.
Through the growth of 7% in 2012-13 in highest in the last five years, however growth and share
of cotton base apparels are coming down because of the slowing demand in global market of
cotton base apparel products. Current FTA engagement gives only 7% value of India’s total
apparel export duty free access in global market while rest of the value remains dutiable which
makes Indian products costlier when compared to China, Bangladesh and Vietnam which have
more than 30% value duty free in the world market due to their LDC status
and FTA
engagement.
Details of India’s FTAs and PTAs already signed are given below
A.
FTAs already signed :
S.
No.
Name of the Agreement
1
India - Sri Lanka FTA
2
Agreement on SAFTA
(India, Pakistan, Nepal, Sri
Lanka, Bangladesh, Bhutan
and the Maldives)
Revised
Agreement
of
Cooperation
between
Government of India and
Nepal to control unauthorized
3
Date of Signing of
the Agreement
28th December.
1998
4th January, 2004
27.10.2009
Date of
Implementation of the
Agreement
March, 2000
1st January, 2006
(Tariff concessions
implemented from
1stJuly, 2006)
27.10.2009
4
5
6
7
8
9
10
trade
India - Bhutan Agreement on
Trade Commerce and Transit
India - Thailand FTA - Early
Harvest Scheme (EHS)
India - Singapore CECA
India - ASEAN- CECA - Trade
in Goods Agreement (Brunei,
Cambodia, Indonesia, Laos,
Malaysia,
Myanmar,
Philippines,
Singapore,
Thailand and Vietnam)
India - South Korea CEPA
India - Japan CEPA
India - Malaysia CECA
17.01.1972
01.09.2004
Renewed periodically,
with mutually agreed
modifications.
01.09.2004
29th June, 2005
13.08.2009
1st August, 2005
01.01.2010
07.08. 2009
16.02.2011
18.02.2011
01.01.2010
01.08.2011
01.07.2011
2. Product coverage in terms of HS codes in the sector
Under the clothing sectors HS 61&62 are covered which have around 34 categories at HS 4
digit, 249 product category at HS 6 digit and around 398 products categories at HS 8 digit
followed in
India. However, in case of India more than 90% exports are confined to 100
products at HS 6 digit. (List of the product category at HS 4, 6 and 8 digit are given in annexure
1).
1.
India has proactively followed diversification policy by way of incentivizing the export to
non-traditional market as well as actively engaging itself in the bilateral trade agreements. India
so far has signed almost 15 pacts falling in the various categories of bilateral trade treaties like
Free Trade Agreements (FTA)/Preferential Trade Agreements (PTA)/ Comprehensive Economic
cooperation Agreement (CECA)/ Comprehensive Economic partnership Agreement CEPA.
2.
Trade Agreements Signed (FTA/CEPA/CECA) (10)
S.
No.
Name of the Agreement
1
India - Sri Lanka FTA
2
Agreement on SAFTA
(India, Pakistan, Nepal, Sri
Lanka, Bangladesh, Bhutan
and the Maldives)
Date of Signing of
the Agreement
28th December.
1998
4th January, 2004
Date of
Implementation of the
Agreement
March, 2000
1st January, 2006
(Tariff concessions
implemented from
1stJuly, 2006)
3
Revised
Agreement
of
Cooperation
between
Government of India and
Nepal to control unauthorized
trade
India - Bhutan Agreement on
Trade Commerce and Transit
27.10.2009
27.10.2009
17.01.1972
India - Thailand FTA - Early
Harvest Scheme (EHS)
6
India - Singapore CECA
7
India - ASEAN- CECA - Trade
in Goods Agreement (Brunei,
Cambodia, Indonesia, Laos,
Malaysia,
Myanmar,
Philippines,
Singapore,
Thailand and Vietnam)
8
India - South Korea CEPA
9
India - Japan CEPA
10
India - Malaysia CECA
Source: MOC, 2014-15
01.09.2004
Renewed periodically,
with mutually agreed
modifications.
01.09.2004
29th June, 2005
13.08.2009
1st August, 2005
01.01.2010
07.08. 2009
16.02.2011
18.02.2011
01.01.2010
01.08.2011
01.07.2011
4
5
PTAs already signed (5)
S.
No.
Name of the Agreement
1
Asia Pacific Trade Agreement
(APTA)
(Bangladesh, China, India, Republic
of Korea, Sri Lanka)
2
Global System of Trade Preferences
(G S T P)
(Algeria, Argentina, Bangladesh,
Benin, Bolivia, Brazil, Cameroon,
Chile, Colombia, Cuba, Democratic
People's Republic of Korea, Ecuador,
Egypt, Ghana, Guinea, Guyana,
India, Indonesia, Iran, Iraq, Libya,
Malaysia,
Mexico,
Morocco,
Mozambique, Myanmar, Nicaragua,
Nigeria, Pakistan, Peru, Philippines,
Republic
of
Korea,
Romania,
Singapore, Sri Lanka, Sudan,
Thailand, Trinidad and Tobago,
Tunisia, Tanzania, Venezuela, Viet
Nam, Yugoslavia, Zimbabwe)
India - Afghanistan
3
Date of Signing
of the
Agreement
July, 1975
(revised
Agreement
signed
on
nd
2 November,
2005
April, 1988
Date of
Implementation of
the Agreement
1st November,1976
6th March, 2003
May, 2003
April,1989
4
India - MERCOSUR
25th
January,
2004
8th March, 2006
5
India - Chile
Source: MOC, 2014-15
3.
June 1, 2009.
September, 2007
Growth and Share of Garment Exports in India’s FTA Partners
S.
No.
1
Name of the
Agreement
India - Sri Lanka FTA
Share in India’s
Garment Export to
World in % 2013
.4%
CAGR in % before
FTA Implementation
0%
CAGR in % After
FTA
Implementation
1.2%
2
Agreement on SAFTA
.7%
21.4%
24%
(India, Pakistan, Nepal,
Sri Lanka, Bangladesh,
Bhutan
and
the
Maldives)
3
Revised Agreement of
.1%
14.6%
28.7%
Cooperation
between
Government of India
and Nepal to control
unauthorized trade
4
India - Thailand FTA .1%
-10.5%
32.7%
Early Harvest Scheme
(EHS)
5
India - Singapore CECA
.4%
6.6%
4%
6
India - ASEAN- CECA 1.3%
7.3%
11.8%
Trade
in
Goods
Agreement
(Brunei,
Cambodia, Indonesia,
Laos,
Malaysia,
Myanmar, Philippines,
Singapore, Thailand and
Vietnam)
7
India - South Korea
.2%
19.1%
42.1%
CEPA
8
India - Japan CEPA
1.4%
7.3%
7.9%
9
India - Malaysia CECA
.7%
9.7%
36.3%
Source: UN Comtrade, 2014
PTA Already Signed Growth and Share of Garment Exports in India’s FTA Partners
S.
No.
1
Name of the Agreement
Asia Pacific Trade Agreement
(APTA)
(Bangladesh,
China,
India,
Share in India’s
Garment Export
to World in %
2013
1.2%
CAGR in %
before FTA
Implementation
CAGR in % After
FTA
Implementation
22.2%
15.5%
Republic of Korea, Sri Lanka)
Global
System
of
Trade
Preferences
(G S T P)
(Algeria,
Argentina,
Bangladesh, Benin, Bolivia,
Brazil,
Cameroon,
Chile,
Colombia, Cuba, Democratic
People's Republic of Korea,
Ecuador,
Egypt,
Ghana,
Guinea,
Guyana,
India,
Indonesia, Iran, Iraq, Libya,
Malaysia, Mexico, Morocco,
Mozambique,
Myanmar,
Nicaragua, Nigeria, Pakistan,
Peru, Philippines, Republic of
Korea, Romania, Singapore, Sri
Lanka,
Sudan,
Thailand,
Trinidad and Tobago, Tunisia,
Tanzania,
Venezuela,
Viet
Nam, Yugoslavia, Zimbabwe)
3
India - Afghanistan
4
India – MERCOSUR (Brazil,
Argentina, Venezuela, Uruguay,
Paraguay)
5
India - Chile
Source: UN Comtrade, 2014
2
4.
7%
0%
14.4%
.5%
1.5%
-66%
12.4%
12.1%
35.5%
.3%
-9.2%
33.7%
It may be seen from above data analysis that India’s clothing exports to the FTA
countries/blocks have increased significantly after signing of the FTA/PTA agreements. These
markets accounted for 12% share in India’s clothing export to world and around 58% (of US$
475 mn. in 2013) share in India’s global clothing import. Except Singapore market all other
markets have registered positive growth in trade of clothing.
5.
All FTA partners, on the basis of all products account almost 30% share in global GDP,
47% of the global export and 41% of the global import, making them natural choice for economic
tie up. Currently (2013) these countries/regions accounted for almost (US$ 182 bn. in 2013) 54%
share in all commodity export of India to world and again 54% (US$ 252 bn. in 2013) share in all
commodity import of India from world.
6.
Indian textile and clothing sector has done spectacular performance not only by capturing
the new markets but also by way of forex earning and have also helped in reducing global trade
deficit of India in the last 3 to 5 years. India exported worth US$ 2 bn. clothing commodities to
these markets out of total export of US$ 15.7 bn. (2013) and imported around US$ 275 mn. out
of total US$ 475 mn. (2013) making them big and growing trade partner of India.
7.
However, India’s main export markets are EU and USA which accounts 64% share in
India’s total export to world which was around 90% during 2005. Indian exporters are unable to
penetrate in to the US and EU markets which remained protective and are not willing to reduce
the import tariff for Indian garment exporters. Moreover, global competitors like Bangladesh,
Cambodia, Vietnam, Myanmar and Laos enjoy preferential market access in EU markets. On an
average India faces 17% import duties on cotton garments and 29% on MMF garments in USA
and 12% duties in EU market, making almost 64% India’s RMG export by value in-competitive in
these markets. There is tariff escalation in these markets as we move on the higher ladder of
textile and clothing value chain e.g. EU imposes 4% import duties on yarn, 8% on fabric and 12%
on clothing items making the RMG export from India more expensive than the other commodities
of textiles.
3. Major Value Chains in the sector
a. Customs duty structure of raw materials, intermediates and finished goods for
the particular value chain
Customs duty structure of raw materials, intermediates and
finished goods for the particular value chain
Product
Product Label
Code
'50
Silk Fibre, Yarn and fabric
Wool, animal hair, horsehair yarn
'51
and fabric thereof
'52
Cotton Fibre, Yarn and fabric
Vegetable textile fibres nes, paper
'53
yarn, woven fabric
'54
Manmade filaments Yarns
'55
Manmade staple fibres
Wadding, felt, nonwovens, yarns,
'56
twine, cordage, etc
Special woven or tufted fabric,
'58
lace, tapestry etc
Impregnated, coated or laminated
'59
textile fabric
'60
Knitted or crocheted fabric
Source: Trade Map, ITC, 2014
Equivalent ad valorem
tariff applied by India
for import from
overseas markets
13.1
15.4
19.5
9.1
25.9
19.6
10
23.6
10
10.8