$5 billion ambition: Surat textile industry looks at definite gains from India-EU FTA as a bigger market waits to open

The Pandesara-based Laxmipati group has been doing business with Poland and Spain in Europe, adhering to their rigid manufacturing standards.

Although the current business is not very big, Sarawagi is optimistic that India’s exports will go up in the next couple of years once the trade deal comes into force.

“Generally, international brands and multinational companies of the EU were outsourcing to other countries except India. With this FTA, they will now keep an eye on the textile apparel and fabrics of India, thinking of it as a potential market,” Sarawagi told The Indian Express.

‘Research on the fabrics in demand in EU’

Sarawagi, however, has a word of advice for Surat textile industry players.

“The industry players should research on the fabrics in demand in the EU and manufacture fabrics as per their standards. Southern Gujarat Chamber of Commerce and Industry (SGCCI) should take the initiative to send a delegation of textile industry players from Surat to the EU, conduct study visits, interact with the Chambers of Commerce of different countries in the EU, and also invite a delegation of the Chamber of Commerce of the EU. By doing this groundwork, the textile industry of Surat will definitely benefit,” he said.

20% boost in exports from Surat likely: Sanjay Saraogi

Industry veteran Sanjay Saraogi expects a 20 per cent boost in exports from Surat when India’s FTA with the EU comes into force, especially in the textile and apparel sector, where the city contributes to 40 per cent of the country’s Man Made Fabric (MMF) production.  Trade body leaders are looking at the volume and value of exports of textile and related goods going up from the current $3 billion to $ 5 billion when the 12 per cent tariff on them is down to zero as per the FTA.

Ashish Gujarati, president of the Pandesara Weavers Cooperative Society and textile businessman, said Surat has a 10 per cent market share in this sector.

FTA to indirectly benefit Surat textile industry: SGCCI

According to Nikhil Madrasi, Southern Gujarat Chamber of Commerce and Industry (SGCCI), although Surat is not majorly into garment exports, the FTA would indirectly benefit the Surat textile industry.

“Surat is a hub of Man-Made Fibre (MMF) and accounts for 40 per cent of the country’s production. In the MMF sector, Surat accounts for the production of 50 per cent of polyester, 80 percent of nylon, and 90 per cent of viscose in the country. In EU countries, MMF is in huge demand. The annual turnover of synthetic yarn exported from Surat to the EU is around Rs 1,000 crore,” said Madrasi.

So, while Surat does not directly export garments to the EU, it makes fabrics to order from manufacturers in other Indian cities like Delhi, Mumbai, Punjab, Bengaluru, and Ahmedabad, who export to the EU.

“Apart from this, Surat is also a major supplier of technical textile fabrics like home-made textiles (bedsheets, mattresses, curtains, etc.), medical textiles (fabrics used in hospitals) and industrial textiles to other states and also exports to foreign countries,” he said.

Sources in the textile industry say that mainly the apparel and ethnic wear are exported to European countries. The textile supply chain of Surat comprises over five lakh powerlooms, 400 dyeing and printing mills, and around 75,000 textile trading shops, where the sarees, dress materials, burqas, scarves, mattresses, bedsheets, curtain cloth, etc., are sold to different parts of the country and also exported to foreign countries.

India-EU FTA agreement

The India-EU FTA agreement, which concluded on January 28, is a strategic breakthrough in India’s global trade agenda, benefiting crores of textile and apparel workers and artisans in India. The zero per cent duty will unlock the entry of India into the EU textile and clothing market. “It will empower artisans, youth, women, and MSMEs,” said experts in the Surat textile industry.

As per the figures by the Ministry of Commerce and Industry, the FTA unlocks access to the $263.5 billion EU textile market.

According to Gujarati, the FTA will boost Surat’s textile industry by 20 per cent, directly benefiting Micro, Small and Medium Enterprises (MSMEs) widely established in Surat.

“After the FTA is implemented, textile fabrics exported to the EU from India will be cheaper by 10-15 per cent. After the implementation of the FTA, exports of textile fabrics from India to EU countries will increase to 5 billion USD from the current 3 billion USD. This will benefit different textile segments in Surat, like the powerloom sector, processing units, the garment sector, and it will also play a turning point in the manufacturing, employment, and new investments in the textile industry of Surat,” he said.

On the lines of Sarawagi, Madrasi also laid stress on the quality and standards as required by the potential EU market.  The textile industry will now have to do research and see the quality of fabrics, stitches, designs, and work on them, and grab the opportunity, he mentioned. “Due to the 12 per cent FTA, Indian textiles and clothing exported to the EU were much more expensive, so buyers in the EU would get it from Bangladesh, Vietnam, China, and Pakistan. Due to the volatile situation in Bangladesh and Pakistan, buyers in the EU are not willing to enter into long-term business deals with either country. China has shifted its focus from textiles to electronic products. EU buyers have focused on a better alternative, and through FTA, India will get major benefits,” he stated.

Federation of Surat Textile Traders Association president Kailash Hakim said, “From Surat textile markets, around 10 per cent of fabrics are exported across the globe; out of which around 5 per cent are exported to the EU.  Due to the rise in the US tariffs, the textile industry had been hit, and now, with the FTA with the EU, such a loss in the business would be overcome.