Textiles exports revive despite surge in non-trade barriers

Monica Gupta and Rakesh Hari Pathak

Textile exports overcame the stiff challenge of anti-dumping duties and concessions given by European Union to some of India's neighbouring competitors to turnaround and post a positive growth during 2002 though industry's revival was slow and painstaking particularly on the domestic front.

The pick-up in textile exports was particularly commendable after 11 per cent decline in 2001-02. According to ministry officials the sector is likely to clock $13 billion exports during 2002-03 compared to $12 billion the previous year.

However, the renewed buoyancy is not enough to reach the export target of $15 billion with the industry facing rough weather domestically and revival of large number of NTC mills kicking off, but at a very slow pace.

Farmers also faced the brunt of the industry's problem in not being able to get remunerative prices for cotton even as imports of good quality cotton dipped indicating slackness in industrial demand.

Industry also reacted sharply to the government unveiling a three-year roadmap to dilute the jute-packaging Act.

Reasons coming in the way of improved export performance included reduced global demand triggered by slowdown in economies of major trading partners like US, increasing polarisation of world trade, preferential trading blocks and stiff competition from low cost suppliers like Bangladesh and China.

Indian textile exports faced a number of anti-dumping and non-tariff barriers from importing countries with exports of cotton bed linen and polyester staple fibre to European Union and polyester textured filament yarn to Turkey subjected to anti-dumping duties.

Changes introduced by US in its 'rules of origin' criterion also affected our exports to third countries like Sri Lanka and members of the European Union.

Domestic industry was inhibited by over-dependence on cotton powerloom fabrics, lack of modern processing capacities and unorganised and outdated production facilities.

With two years to go before textile quotas are phased out, the next year will be crucial for the industry to sustain its growth and achieve competitiveness.

The year 2002 for exporters began on a sour note with EU's duty-free access to Pakistan's textiles becoming operational under its special tariff arrangement for countries combating drug trafficking.

The measure, estimated to lead to trade diversion of over euro 250 million, was taken up by India at the highest level with EU.

Prime Minister Atal Bihari Vajpayee raised the issue with his EU counterpart at the India-EU summit in Copenhagen in October but the issue till date remains unresolved.

Though EU had indicated that Pakistan had graduated out of the clothing sector under its GSP regime, it is still not clear whether the same has been notified or whether this would lead to a withdrawal of zero duty concessions to Pakistan.

India has moved the World Trade Organisation for setting up a panel, but continues to hope that the issue will be sorted out bilaterally.

-- PTI

2002: The Year That Was