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Saturday, Nov 27, 2004

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Textile cos fear dumping of cheap Thai goods under FTA

G. Gurumurthy

Coimbatore , Nov. 26

DOMESTIC textile manufacturers here, in which a few garment producers too were present, have voiced apprehension on liberalising raw material exports either with tariff concession or zero duty level under the proposed Indo-Thai free trade agreement (FTA).

The first ever consultation meeting with the local textile industry organised here on Wednesday on the Indo-Thai FTA arranged by the Ministry of Textiles' committee also saw the local textile producers expressing doubts over the FTA providing scope to circumvent the rule of origin clause thereby turning Thailand a conduit to dump cheap textile goods imports into India from a third country, notably from China.

"Thailand, though lacked in raw material such as raw cotton/cotton yarn, is vested with modern weaving machines superior to India and enjoys better logistic infrastructure. In contrast, Indian textile industries remain fragmented as they are, where one's finished product is the raw material for the other. This being the case, any unrestrained release of raw material would harm local textile industries which are predominantly under the small and medium enterprises," members of small textile enterprises participating at the meet pointed out.

This section also argued that this structure of the domestic textile industry would also demand the need to look at the tariff concession to be evolved under the Indo-Thai FTA accordingly and the general perception on tariffs that raw material should attract lower duty than finished products cannot be applied to cotton textiles.

Considering the `local industries' angle, these members wanted the export of cotton/cotton-related raw materials under `sensitive' list by setting up a restraint-tariff mechanism.

The consultative meeting with the local textile industries was called, among other things, to sensitise local textile/garment industries on the Indo-Thai FTA, identify items that are sensitive for India on which tariff concessions or no tariff concessions could be extended under the FTA and suggesting tariff lines.

The meeting was chaired by Dr Veena Jha, India Programme Coordinator of the United Nations Conference on Trade and Industry (Unctad), which has been engaged by the Union Commerce Ministry to identify the list of sensitive items based on inputs on the current bilateral/global trade from India/ Thailand. The other top ranking officials who took part in the deliberations are Dr P. Nayak, Director (market research), Textiles Committee and Ms Geetu Sidhu, Deputy Director, Ministry of Commerce.

Some of the representatives of the textile industry felt that they were not given sufficient time to study in detail the list of sensitive items or the tariffs to be covered under the FTA's early harvest scheme as the intimation on the proposed consultation meet itself was circulated just two days before this meet.

Some members suggested that the Unctad could work out a separate sensitive level for cotton textiles in relation to the Indo-Thai FTA.

Later, talking to the presspersons, Dr Jha said the first list of sensitive items for India should be ready to be presented to the Government by the first week of December as the Thai Government delegation visiting India is expected to exchange the lists possibly on December 13. The consultations with the domestic textile industries in other major textile centres would be held in the coming days. The first phase of tariff phase out for common list of 82 items will be implemented by September 2006.

Unctad's preliminary studies point that India's cotton textiles stand to benefit under the FTA whereas, Thailand's man-made fibre industries would wield a higher degree of export competitiveness over that of India.

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