NEW DELHI : Textiles will be one of India’s priority areas in free trade agreements (FTAs) being negotiated with more than a dozen countries, said Narendra Goenka, chairman of India’s Export Promotion Council. clothing (AEPC). In an interview, Goenka expressed his concerns over high raw material prices which have been a major challenge for the garment industry. Government data also shows that the sharp rise in cotton prices has led to high inflation of 8.84% over 97 months for clothing and footwear. Edited excerpts.
Many FTAs are planned for the next few months. So, what is the objective of the textile sector?
FTAs will be a game-changer for the textile industry. We need to take full advantage of FTAs because they can provide a great opportunity for growth, and the government is pushing for this. We advocated for the inclusion of clothing in the “early harvest” of FTAs. The Ministry of Commerce is pushing for garment exports. In fact, in all trade negotiations, textiles and clothing could be among the first harvests.
For example, Australia’s supply of clothing before covid came mostly from China, but now Australia’s relationship with China has bottomed out. This has created an opportunity for higher garment exports from India. Australia is a priority area for apparel exports since similar products are made in India at similar prices. If tariff barriers are removed, this could be a great opportunity. We have also started preparing for additional capacity as there might be a good opportunity after signing an FTA with the UK. We are more confident in the UK than in Australia as it is a more established market for India, and there is a good chance that the UK has very good potential for export.
Has the EU budget addressed the weaknesses of the sector?
Our request for restoration of trimmings and embellishments as part of the duty free regime was accepted. However, the request for removal of duties on imports of raw cotton has not yet been granted. This could have helped stabilize commodity prices.
Currently, the prices of raw materials in the textile industry are exploding, which has an impact on exports. Cotton prices have risen nearly 100% over the past year. The demand is very good. Up to a point, customers were adjusting to higher prices, but now prices are out of control. We have already started to see resistance from customers for the upcoming Spring 2023 sales.
What is the reason for the rise in cotton prices and where does it lead us in terms of global competitiveness?
There has been significant growth in commodity exports from pre-covid levels. World cotton prices have risen since the United States banned the import of cotton products from China’s Xinjiang region. India’s cotton and cotton yarn exports increased at the expense of garment exports. Raw cotton exports have almost quadrupled in volume over the past three years. Cotton yarn exports also increased 1.6 times in volume over the three-year period. Thus, the rise in the price of raw materials has pushed up the price of clothing.
Has the government taken measures to control commodity prices? When will the prices go down?
The government is working with distribution partners in the industry, but we have not yet reached a conclusion. As for cotton prices, they are linked to international prices. It all depends on how global demand for cotton and cotton yarn develops. Demand from the US is strong as they have stopped sourcing cotton from China. In India, demand is high as export and domestic markets use cotton. We expect trends to continue, especially for the export sector, until peak season prevails around March-April. May to July is generally a low season for garment exports.
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