Indian textile exports industry is important for Indian economy. With a long history in textile and garment export as a major foreign exchange source, India has become one of the world’s largest exporters of textiles and garments. Nevertheless, there are a lot of challenges for textile exporters in India in the global market. Free Trade Agreements (FTAs) have proven to be the single best way to overcome these challenges.

This blog explores how textile exporters can use FTAs to increase their growth and diversify into new export markets.

Understanding textile exports and free trade agreements

The term textile exports is concerning the sale and shipping of textiles, fabrics, and cloth from a country to a further country. India is one of the top textile and apparel exporters in the world. India has been playing a crucial role as a part of the worldwide supply chain to fulfil the global desire for fashion, home textiles, and technical textiles.

 

Free Trade Agreement (FTA) means the negotiation or agreement between two or more countries that seeks to demilitarise trade barriers. There can be subbarries, like tariffs and quotas, and other restrictions. FTAs are agreements between countries that agree to reduce trade barriers and make it easier to export products to the countries.

For textile exporters, even FTAs can be used as a powerful device to enhance their competitive advantage in international markets.

How Textile Exporters Benefit from FTAs:

1. Lower Costs In Transit, Import Taxes and Tariffs

The reduction or elimination of tariffs and taxes on exports is one of the most important advantages of FTAs. According to the Confederation of Indian Industry (CII), the India-ASEAN FTA allowed Indian textile exports to grow by 20 to 25 percent after its introduction. Cheap exports of textiles through lower tariffs make them increasingly affordable to foreign buyers, who are likely to be interested in buying.

When Indian exports of textiles and apparel have zero or low tariffs in the destination markets, either because of free trade agreements or zero tariffs, exporters can price competitive. In areas like textiles and garments where there is fierce price competition, particularly so.

 

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1. Market Access and New Opportunities

The appeal of an FTA is because it opens new markets to textile exporters. FTAs remove the barriers to trade, which allows businesses to go into countries that were hard to do business with before. For instance, the India-MERCOSUR FTA allows Indian exporters of textiles to gain access to Latin America’s markets, in which Indian textile demand is increasing.

These agreements give opportunity for growth. Since the Indian textile and apparel exports enjoy trading with its partners, the volume of sales may get enhanced. In addition, FTAs provide preferential treatment, including an advantage to Indian textile exporters against competitors from other countries that don’t have FTAs.

1. Supply Chain strengthening

Are there improvements in the supply chain for textile exporters under international free trade agreements? Raw material sourcing is much easier in many FTAs that come with easy sourcing for raw materials. In other cases, the FTA’s between, for example, the India and Korea FTA enable Indian textile exporters to source garments and other material at cheaper rates. It minimises the production cost and heightens the efficiency of the textile and apparel exports in India.

In addition, FTAs relieve logistics by making shipments of textiles abroad easier and faster. It makes the Indian textile industry more competitive.

1. The Many Investment Opportunities

FTAs will help divert FDI to the textile sector. By doing so and signing FTAs, countries communicate to investors that the market is stable and anything is available for business. Therefore, foreign companies may be more readily attracted into the Indian textile industry, resulting in better infrastructure, technology, and business opportunities.

For instance, the India-Japan FTA has caused an investment in the Indian textile manufacturing sector. And that has enabled textile exporters to increase the quality of their products and, in some cases, to adopt more sophisticated manufacturing methods so they can compete on the world market.

 

1. Enhanced Competitiveness

FTAs also reduce the playing field to some degree, making it even more level for textile exporters. FTAs reduce trade barriers, allowing smaller exporters to compete against larger, well-known companies. These agreements make it possible for textile exporters to expand into new regions, add to their product offering, grow their business, and improve their market share.

Information on trade agreements, market conditions, and how FTAs can be leveraged to the benefit of exporters is provided by the Exports Promotion Council. It remains easy for Indian textile exporters to capture the benefits of FTAs.

Major FTAs Benefiting Textile Exports from India

1. India-ASEAN FTA

It is true that the India-ASEAN FTA has been one of the most successful agreements for the exports of Indian textiles and apparel. India’s textile exports to ASEAN countries have grown manifold since its implementation. This agreement gives Indian textile exporters reduced tariffs in the markets of Indonesia, Malaysia, Singapore, and Thailand.

1. India-EU FTA

Another important trade agreement of Indian textile exporters is the India-EU FTA. Indian textiles and garments are among the largest markets for the EU, and this FTA has enabled reducing tariffs and facilitating market access. Indian textile and apparel exports face lower import duties in the main European markets, easing exporters’ ability to make sales.

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1. India-US FTA

The India-US FTA helps India fend off the growing threat of a reduction in imports from China to the Indian textile sector in the global textile supply chain. India’s largest textile export market is the US. Among them, textile exporters will have easier access to the US market and fewer restrictions under this agreement.

1. India-Australia FTA

Indian textile exporters will benefit from the India-Australia FTA. The agreement means that tariffs on textiles and garments have come down, making Indian products cheaper on the Australian shelf. This has enabled an increase in exports of Indian textiles to Australia, which is beneficial for the Indian textile industry.

 

How Can Textile Exporters Leverage FTAs for Growth?

1. Advise me to understand the Terms of the FTA

To the knowledge of textile exporters, it is extremely important to have complete knowledge of the terms and conditions of the FTAs. It includes the duty rates, rules of origin, and the exact benefits that we can enjoy under each of the agreements. The information helps exporters exploit the opportunities offered by FTAs.

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1. Soothing Relationships with All of our International Partners

Leveraging FTAs requires building strong relationships with international buyers and partners. Indian textile exporters must make the connection with foreign countries’ buyers under FTAs. The knowledge of the new relationships can lead to new market and business opportunities.

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1. It´s time to upgrade production capabilities.

To gain from an FTA, textile exporters must impressively show that their production is being carried out according to international standards. To meet the needs of global markets, manufacturing facilities can be upgraded, quality control can be improved, and some innovative technology can be used.

1. Seek Government Support

There are government bodies for which Indian textile exporters can seek support, one such being the Exports Promotion Council. They are also a great source for advice on how to work your way into the world’s trade agreements and international markets.

Conclusion

India is relying on these textile exports, which are very important to the economy, and FTAs are very good opportunities to enhance these businesses. FTAs can prove helpful to the Indian textile exporters by reducing tariffs, increasing market access, and boosting the supply chain.

All those who aspire to become textile exporters should explore the resources and reports presented by NIIR Project Consultancy Services. With their comprehensive guides, you will understand market trends, production techniques, and export regulations and can grow your business successfully.