Textile sector gears up for end of quotas

The Indian textile industry is fast gearing up for the post-quota regime that will be in place from January 1, 2005.

It will lead to the emergence of a whole new market place driven by the consolidation of supplying sources worldwide, market domination by global retail chains, constant downward pressure on selling prices and the fast changing consumer demand.

One of the major expectations of the Indian industry in this backdrop is the total elimination of the restrictions enshrined in the Agreement on Textiles and Clothing (ATC), according to Texprocil.

The industry is wary about the fact that the US will integrate 89 per cent of its products, the European Commission, 70 per cent and Canada 79 per cent of the products on the last day.

It hopes that the integration process reaches its logical end with respect to the stake holders in developing countries.

It is also expectant about the anti-dumping and anti-subsidy actions and hope they are not resorted to in an indiscriminate manner, to protect domestic industries in the importing countries.

Developed countries like the European Union (EU) where quantitative restrictions have been in force are looking to initiate action when the restrictions are removed according to the report.

The European Commission (EC) has already amended the relevant regulations to protect its industry during the transition.

Anti-subsidy action has been observed to be a good support to and in some cases a substitute for anti-dumping action.

In the case of imports of bed linen from India to the EU, the EC has substituted an anti-subsidy action for the anti-dumping proceeding, which is incompatible with the WTO rules.

Indian exporters of bed linen will also be required to pay higher duties when they export to countries like Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania and Malta.

Safeguard measures are an area of concern given the fact that they are directly linked to an increase in imports causing serious injury to the domestic industry.

Another point of contention is the Rules of Origin that are currently under active negotiation in the Committee on Rules of Origin (CRO). The industry is keen that it is formulated in a manner that does not impede trade.

According to the report, a trend that has been observed is the fresh impetus given to the efforts to adopt origin labels. The EC for instance is pushing for the industry to adopt a "Made in Europe" label of origin.

On the removal of quotas, the Indian industry players are looking forward to more export competitiveness after the regime is in place and hope that trade matters will not be linked with standards of labour and environment.