The Hindu Business Line : It's advantage India as China plans to tax its textile exporters

WITH China planning to impose a new set of high tariffs on its garment exports to the US and the EU, Indian apparel exporters could stand to gain market share in the two key markets.

Faced with a backlash in the US and the EU markets, China is likely to impose higher tariffs of as much as 50 cents per item on exporters in case of product categories such as shirts, trousers and ladies wear, the very items where Indian suppliers have a significant presence, industry players said.

Both the EU and the US have announced plans to consider imposing "safeguard quotas" on soaring Chinese textile and apparel imports.

While the Chinese textile and garment imports shot up by nearly 75 per cent in the US during the first three months of the current year, Indian exporters figure among the top three suppliers in case of most product categories, with a jump of about 25 per cent.

The European Commission said last week that it would decide by April 25 whether it would launch a process that could lead to curbs on Chinese imports, similar to a probe launched by the US Commerce Department early this month.

Even though quantitative restrictions on the global textile trade were done away from January 1, under China's Accession Agreement to the World Trade Organisation, member-countries can impose quantitative restrictions in the form of "safeguard quotas" on Chinese imports till 2008 if they can prove that imports from the country are getting "market disruptive" in nature.

The restrictive clause applies only to China because of its late entry into the WTO.

The US and the EU are India's biggest market for textile exports, and Indian exporters have been smarting under severe competition from Chinese suppliers on most product categories since the opening up of the global textile trade. Exporters admit that during the last few weeks, there has been an increase in enquiries from European and US retailers who are at present sourcing from the country.

"Many of the buyers have big exposures in China and if a clampdown on imports from that country is effected, they would have to fall back on countries such as India for getting the bigger orders processed at prices comparable to those quoted by China," an exporter said.

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