The European textile industry is currently grappling with challenges when it comes to conducting trade with India, mainly due to India’s protectionist policies. Negotiations for a free-trade agreement between the European Union (EU) and India, which commenced in 2017, have been arduous and are expected to continue encountering barriers. This is a pressing concern for European textile manufacturers who are eagerly seeking access to the lucrative Indian market.
In the year 2021 alone, India emerged as the fourth-largest supplier of clothing and the third-largest supplier of textiles to the EU, with goods valued at €3.4 billion and €2.7 billion respectively. Surprisingly, despite its significant supply contributions, the Indian market failed to secure a spot in the top 20 buyers of EU clothing. Similarly, it also ranked a modest 13th for textile orders, with materials worth a mere €398 million. Consequently, India currently stands as only the 20th largest customer for clothing and textiles combined within the EU.
Recognizing this trade imbalance, the European confederation of textile industries, Euratex, has drawn attention to the prevailing challenges faced by European businesses in accessing the Indian market. While India benefits from preferential customs facilities under the Generalised System of Preferences, European businesses grapple with non-tariff barriers, demanding proof of origin requirements, stringent quality control measures, and supportive domestic programs within India that hinder their market entry.
Euratex has been vocal about the crucial need for a level playing field and parity in sustainability goals. With the EU actively implementing its European textile strategy, which encompasses stringent standards and limitations on chemical usage, it is imperative that any free-trade agreement with India aligns with these goals. European textile manufacturers have accordingly urged for reciprocity, transparency, fair competition, and similar regulations to be incorporated in the upcoming negotiations. Furthermore, they have emphasized their capability to deliver high-quality products while supporting the industry’s transition towards enhanced environmental sustainability.
In a positive development, India has recently reported a noteworthy surge in its textile and clothing exports, reaching a staggering €44.4 billion in the 2022 financial year. Europe stands as the second-largest buyer of Indian textiles, holding an 18% market share, trailing only behind the United States with a market share of 27%. This firmly positions Europe ahead of competitors such as Bangladesh and the United Arab Emirates, with market shares of 12% and 6% respectively.
To summarize, the European textile industry is fervently seeking solutions to overcome India’s protectionist policies and attain fair and reciprocal trade opportunities. European textile manufacturers are hopeful that the forthcoming round of negotiations will address the barriers obstructing their access to the Indian market, while ensuring that the free-trade agreement aligns harmoniously with the EU’s sustainability goals and standards. Upholding transparency, fair competition, and the implementation of similar regulations will prove instrumental in nurturing a mutually beneficial trade relationship between the EU and India.
Useful Links:
– https://www.reuters.com/article/india-eu-trade-idINKCN24J0P6
– https://www.euratex.eu/news/euratex-welcomes-trade-commissioner-recommendations-on-eu-trade-and-economic-relations-with-india/
