'India under cheap textile imports threat'

Though the end of the quota regime has made India a much sought-after destination in the textile sector, the industry here is reeling under fears of cheap imports from Sri Lanka and Bangladesh.

"As of now, Bangladesh and Sri Lanka have competitive advantage over India in the textile sector as they have access to cheap manpower as compared to India. So, Indian textile companies are fearing an onslaught of cheap imports from these countries, which will wreck their growth chances here. Our ministry will take necessary steps to safeguard the interest of our domestic industry," R S Ratna, director, ministry of commerce and industry, told Business Standard.

Indian textile companies want textile to be deemed as 'sensitive' under the provisions of Bay of Bengal Initiative for Multisectoral Technical and Economic Co-operation Free Trade Area (BIMSTEC FTA) agreement.

At the regional level, India will keep its textile market close for BIMSTEC member countries, which include Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.

Textile is proposed to be in the negative list under the BIMSTEC FTA framework agreement.

As per the framework agreement, the negotiations for tariff reduction and elimination for FTA in goods, which started in July 2004, will be concluded by December 2005.

It may be recalled that the Framework Agreement on BIMSTEC FTA was signed on February 8, 2004 in Phuket, Thailand and a protocol to the agreement was signed on June 25, 2004.

The Framework Agreement includes provisions for negotiations on FTA in goods, services and investments.

"India's approach to BIMSTEC FTA will be finalised soon depending on extensive consultations with the domestic trade and industry. An indicative 'Sensitive List' consisting of 1,761 items has been drawn up for BIMSTEC FTA. However, the list needs to be carefully examined and will be finalised by mid-May. The sensitive list, includes items that will not qualify for custom duty reduction under the BIMSTEC FTA," said Ratna.

The share of BIMSTEC countries in Indian global exports has been steadily rising between 1999-2000 and 2002-2003, while on the other hand, BIMSTEC - countries' share in Indian global imports has not only been fluctuating during the same period but has also remained relatively smaller (just two per cent as against over six per cent in the case of exports during 2002-2003).

Textiles and clothing exports from India to BIMSTEC - countries accounted for around 11 per cent, while the textile and clothing imports to India is pegged at around 10.6 per cent.

The industry is expected to post a turnover of US$50bn from the current US$13bn in the next five years.