The Hindu Business Line : Textile exporters may lose out on EU preferential rates

THE slugfest among European Union members on tightening the concessional tariff norms under the bloc's Generalised System of Preferences (GSP) for developing nations could leave Indian textile players out in the cold.

With a number of EU members led by Italy and France demanding that the threshold for trading partners to qualify for low tariffs be set at 10 per cent of total EU imports in the sector, Indian textiles sector - which has a share of around 11 per cent - could lose out on the preferential tariffs.

Reacting to the move, a domestic exporter said the EU nations were trying to clamp down on the entry of Indian items by attempting to bring in the 10 per cent market-share norm.

"Blocking out Indian textile items seem to be the only reason prompting several of the European Governments to propose a tightening of the threshold at precisely the 10 per cent mark," an industry player said.

The European Union's new GSP system, which was proposed last year to provide a level playing field to the Least Developing Countries, is expected to come into force from April 1 this year.

The domestic industry has adopted a wait and watch policy. Some players are, however, confident that even if they miss out on the concessional tariffs under the scheme, Indian exports would still make up in the due course.

"In the US, for instance, Indian exports face a tariff barrier of between 17-32 per cent and we are still doing well against competition from duty-free imports from NAFTA member. The loss of preferential tariffs to EU exports should only be a temporary setback for Indian exports," an industry player said.

In fact, the UK, Germany and Denmark are among the EU members that are trying to get the threshold raised to 15 per cent to allow Indian textile items to get the duty benefits. A compromise formula among EU members for having a 12.5 per cent threshold for providing GSP benefits to developing nations is also being discussed, industry players said.

Chinese exports to the EU, which are already under the scanner due to an abnormal rise in volumes during the first two months of the current year, are anyway out of the running for the GSP benefits since its textile exports are way above 20 per cent of EU's total imports in the sector.

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