The government is considering forging a separate preferential trade agreement with the United Kingdom after its decision following a referendum to exit the European Union (EU) besides ongoing negotiations for a free trade agreement with that trade and economic bloc.
Union textiles secretary, Rashmi Verma said that the commerce ministry is actively considering starting a dialogue with United Kingdom for a preferential trade agreement, one that brings significant benefit to the country’s textile sector. Speaking to The Indian Express, Verma said, “With the Brexit verdict, we are looking at a preferential trade agreement with the United Kingdom. This is the right time to negotiate given that the country is also a bit vulnerable at this point. It is very much under discussion and the Ministry of Trade and Commerce is looking at a possibility of this kind of a dialogue.”
Textiles are among the main exports to the United Kingdom from India besides machinery, petroleum products, leather, gems and jewellery, among others. After Mauritius and Singapore, the United Kingdom is the third-largest investor into India with cumulative foreign direct equity investments of $23.1 billion from April 2000 to March 2015. This accounts for eight per cent of the total FDI inflows into India.
Verma said, the government is also simultaneously making a lot of effort at clinching a free trade agreement with the EU, giving it top priority, with it being one of India’s biggest markets especially for textiles.
Verma said, “We need to also take a fresh look at free trade agreements with about 15 other countries, including Japan. These were signed a long time ago. We need to renegotiate these to see that there is an advantage to India’s textile sector. Our focus has to change given the huge employment potential in the sector.”
She added, while recently clearing a special package for the textiles sector, Union cabinet members noted that there was a need for trade agreements with Britain and EU.
The Union cabinet last week cleared a Rs 6,000-crore package for the textile sector with an aim to tap China’s receding share in the market.
The several benefits under the package include additional incentives for duty drawback scheme for garments, flexibility in labour laws, and tax and production incentives for job creation in garment manufacturing. With this, the Union government hopes to create one crore new jobs in three years, attracting investments of $11 billion and generating $30 billion in exports.