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Free trade: European textiles face Indian protectionism
This October, the European Union and India will relaunch negotiations towards a free-trade agreement. Negotiations have run into roadblocks since their initiation in 2017, and are once again expected to come up against India’s policy of national preference. For European textile manufacturers faced with an imbalance in trade, the obstacles they encounter at the gates of the Indian market must be lifted.
In 2021, India ranked fourth among EU suppliers for clothing and third for textiles, valued at €3.4 billion and €2.7 billion worth of goods respectively. Conversely, the exceedingly large Indian market did not even make it into the top 20 of EU clothing buyers and only ranks 13th for textile orders, valued at just €398 million worth of materials. These figures barely enable India to rank as the EU’s 20th largest customer for clothing and textiles together.
As India benefits from the customs facilities of the Generalised System of Preferences, the European confederation of textile industries Euratex points to a very different state of affairs for textile exporters in Europe.
“For European businesses, on the other hand, access to the Indian market is difficult,” said Euratex. “This is because they must face non-tariff barriers (relating to proof of origin and quality control measures among others), as well as contend with Indian national and state level support programs which distort equal opportunities between European and Indian businesses.”
“Creating a level playing field should also apply to our sustainability goals,” said Euratex. “As the EU will roll out its European textile strategy, which sets ambitious standards and restrictions (for example, on chemicals), we must ensure that the FTA is fully in line with this strategy.”
Indicating that they are eagerly awaiting the next round of negotiations, European textile manufacturers have asked negotiators this summer to ensure reciprocity, transparency, fair competition, and similar regulations in the upcoming agreement. They have also underlined the ability of the EU to provide superior quality products, as well as support for the sector in its transition to becoming more environmentally friendly.
In the 2022 financial year ending March 31, India reported having exported €44.4 billion worth of textiles and clothing, representing a 41% increase compared to the previous fiscal and 26% increase compared to the 2020 financial year. Europe ranks second among Indian textile buyers with a 18% market share, sitting behind the US which has a 27% market share. Europe comes in ahead of Bangladesh, which has a 12% market share and the UAE with 6% market share.
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