A policy document is one that charts out the path and outlines the goals for a sector or an industry. In that, the Indian textiles and apparel industry has been waiting with bated breath for the National Textiles Policy (NTP) that will hopefully be announced in less than three months from now. The current 2000 policy is hopelessly outdated, given three major international developments: the phase-out of the Multi Fibre Agreement (MFA), the emergence of China in global trade particularly in the field of textiles and apparel, and the 2008 global financial crisis. The world has changed considerably since 2000. Automation is in, printing has gone digital and e-commerce has changed the way money is made in the 21st century. As the ministry of textiles works overtime to draft the NTP, Subir Ghosh does a SWOT (strengths, weaknesses, opportunities, threats) analysis of a few select sectors and aspects of the Indian textiles and apparel industry. The elements are not in any order of preference, and covering all angles would be beyond the scope of this article.
The sheer expanse of the textiles and apparel industry can be extremely overwhelming for the uninitiated eye. The value chain of this industry is possibly the longest, and its Indian avatar is crucial not just to the country's political economy, but has a bearing on its socio-cultural fabric too. From the unorganised handloom sector to the capital-intensive retail outlets, and from decentralised powerlooms to state-of-the-art manufacturing facilities, the Indian textiles and apparel sector cuts across traditional agriculture and conventional industry. The textiles-apparel industry contributes a tenth to the country's manufacturing production, and no Union Budget can alone meet all, or even most, demands of this industry. It needs a straightjacket, proper policy framework. For the same reason, the ₹6,000 crore package for the industry could only have been a short-term fire-fighting measure.
From farming to spinning and from fabrics to retail, this is an industry where often the left hand does not know what the right is doing. Most segments of the industry exist, for all good reason, in either their own silos or comfort zones. Moreover, the length and spread of the industry is so huge that it is actually not possible for most people from one segment to have the faintest clue about what another segment is all about. Establishing such linkages and codifying them in stone is the responsibility of a policy. And for an industry that is forever in flux either because of technological advancements or international developments that disrupt global trade or what have you, the need for a National Textiles Policy (NTP) becomes all the more dire.
But it is easier said than done. Any NTP that replaces the hopelessly-outdated one of 2000 will not just have to maintain a balancing act among planet, people and profit, it will have to be a jigsaw puzzle that has been solved for good and is future-proof. A policy after all cannot be a mere status report about a sector of the economy; it needs to ascertain the future and chart out a path towards it. It was for this reason, among many others, that the 2000 policy looks not just jaded, but embarrassingly anachronistic. Even though the Multi Fibre Agreement (MFA) was already on its way out at the time, the policy had failed to guide industry out. Even though China was just about making its debut in world trade, the policy had failed to foresee how that country would go on to dominate textiles-apparel. Even though the Internet was well in at that time, the policy had failed to understand how e-commerce would eventually rule in spite of the Dotcom Doom. Of course, it is a different thing that few had expected the 2008 financial crisis to knock the winds off the global economy's sails. But then, that is also what a policy is expected to do: without a Plan B as backup, a Plan A might well only be worth the paper that it is essentially printed on.
related to fashion andaccessories, and such queries were increasing at a rate of 65 per cent everyyear. Out of India's 240 million households, at least 50 million are said to beaspirational global consumers. This, in turn, has been boosting the rise offashion e-commerce. Growth has also been coming from areas that were till a fewyears back outside the radar of most brands and e-commerce companies. Withincreasing Internet penetration in tier-II and III cities, online shopping hasseen a quantum jump there. Not surprisingly, women in these cities and townshave been playing a major role in pushing sales. With the government's push fora cashless / less-cash economy, online transactions have been expected to takea hit in the short run. Three out of every four online transactions on shoppingportals were based on the cash-on-delivery (COD) system till a year back. Sincea bulk of the COD sales come from the smaller towns and cities, the penetrationof point-of-sale (PoS) machines will need to rapid and sure-shot.
Exports: India remains the second largest manufacturer of textiles and apparel in the world, next only to China. The significance of this industry, apart from the over-arching fact that it employs 4.5 crore people directly and another 6 crore individuals indirectly across the value chain, lies in the fact that its share in India's total exports stands at a substantial 15 per cent. Besides, India's share in the global textiles and apparel market is 5 per cent. This last number is worrisome since India's share of the global pie has not been increasing at the rate the country would like it to. There was 
some bad news on the exports front in May this year when the government re-set a target of $45 billion exports from the country's textiles and apparel sector in 2017-18, which was much lower than the $48 billion that was set for the last fiscal. The target for 2017-18 will nevertheless represent a 17 per cent rise from the actual level of $38.6 billion in 2016-17, according to provisional official estimates. While garments exports witnessed a marginal rise from the year before, textiles exports dropped in the last fiscal. India's overall textiles and garments exports during 2015-16 was $40 billion, owing to significantly less demand in major developed markets such as the US, EU and China which have been witnessing a rather slow recovery from the global slump, and stiff competition from countries like Vietnam, Bangladesh and Pakistan, all of which enjoy zero-duty access to some of the key markets that for the same reason remain out of India's grasp. Apparel exports, nevertheless, are expected to increase, according to industry estimates. The Apparel Export Promotion Council (AEPC), which in April this year conducted a survey across eight states where there is significant apparel production to ascertain the catalyst for the exceptional differentiated export growth of 31.7 per cent, found that the Rebate of State Levies (RoSL) scheme has had a perceptible impact on the industry's performance. It said that over the next three years, this can consistently increase exports. Since about 80 per cent beneficiaries of RoSL are exporters with a turnover of less than ₹10 crore per year, the council wants this to continue. The benefits accrued, otherwise, could be frittered away.
E-commerce: The e-commerce space has been seeing a flurry of activities over the past one year. There is little doubt that the dynamic of online business has changed, drastically. From being just another keepsake category on shopping portals till even a few years back, fashion has now become a deciding factor for the big players in the e-commerce sector. It is now being seen as a lever that can tilt the balance in favour of the one who plays the fashion card the best. There might be some confusion in terms of how the numbers stack up, since different estimates give different numbers. The gap between the highest and lowest estimates is $70 billion. Global financial services firm Morgan Stanley estimates that e-commerce sales in India will reach almost $120 billion by 2020; while banking and financial services group UBS Group AG predicts that online retail will be $48-60 billion by that year. Other estimates fall somewhere in between, but all indicate the drivers quite clearly: rising sales of smartphones and mobile Internet connections, rising incomes, uninterrupted flow of capital, shortage of organised retail stores and improvement in e-commerce infrastructure such as logistics and payments. As things stand, travel (including airlines, railways and hotel bookings) remains the top driver of e-commerce; fashion comes next and is not too far behind. This trend is going to continue, with each not in conflict with the other. This is borne by the fact that every third search query on Google two years back was
Quotas of course are long gone and
become part of textile folklore, and the World Trade Organization (WTO) is a
pale and impotent shadow of its former powerful self. Today, it is the era of
regional blocs and one-to-one free trade agreements (FTAs). Today, you have to
Make in India, and you have to Make for the World. If the world is not there to
consume what India produces, a lot of time, money and resources would have gone
waste. And India can ill-afford to let that happen. The NTP, therefore, should
factor in that cushioning aspect and weaves it through all sectors and segments
of the industry. That way, even if the world does not extricate itself from the
still-continuing slump, India can still make hay with its own massive domestic
market.
There would also be a need to look
at certain segments and issues not in an isolated manner, but make the
solutions cut across sectors. For instance, the question of skill development
cannot and should not be an end in itself, but must be seen as the means to an
end. Skill development is needed, particularly in the lower rungs of all
segments, across the value chain. This can extend right from empowering cotton
farmers so that they can free themselves from eternal debts to the soft skills
that are mandatory for retail outlets. The "human" element of the
textiles and apparel industry often gets left out of debates, and it is true
that even though countless institutes have mushroomed across the country to cater
to the industry, precious few of them are of international standards. The same
argument (that of inter-sectoral interventions) goes for medium, small and
micro enterprises (MSMEs), that form the invisible backbone of the industry.
Looking at this arguably unorganised segment might be fallacious if one
considers that their requirements to be one and the same. After all, the
requirement of a small spinning factory would be very different from another
that supplies buttons to an apparel exporter. Some might need short-term loans,
while others might require long-term schemes. Some might require help in terms
of raw materials, while others might want easing of certain export
restrictions. In this stead, the agreement between the ministries of MSMEs and
textiles is more than welcome. In fact, more such inter-ministerial
interventions are necessary. This is an industry whose innumerable components
are beholden to various ministries: from ministry of agriculture to ministry of
commerce; and from ministry of MSMEs to ministry of textiles.
The biggest challenge for the NTP,
however, would be sustainability. The textiles and apparel industry-not just in
India but the world over-had over the decades earned itself a notorious name
for being environmentally and socially irresponsible. It has only been in the
last five years or so that the question of sustainability has not only been
figuring in the discourse at trade events and leadership gatherings the world
over, it has also made it into corporate policies and has its own timeshare at
corporate boardrooms. These are early days yet and given the expanse of the
industry, developments on sustainability are only beginning to make their
presence felt across the value chain. It will therefore be here that the NTP
will have to make India lead from the front on the issue of sustainability. The
policy can be about all segments and aspects that belong to the textiles and
apparel industry, but the one thread that will bind them all would have to be
sustainability. In other words, the NTP will have to think in terms of a
circular economy. Fashion is after all not just about cotton farmers and retail
outlets; it is as much about the textile waste that is filling up landfills the
world over. The NTP needs to believe that "sustainable fashion" is
only a niche segment that is over ten years old; the future of fashion is
"sustainability."
So, let's do a quick SWOT (strengths, weaknesses, opportunities, threats) analysis of a few select sectors and aspects of the Indian textiles and apparel industry. The elements are not in any order of preference, and covering all angles would be beyond the scope of this article.
The Core
Cotton: Cotton continues its suzerainty as one of the principal agricultural crops in the country and one of the major sources of raw material for the Indian textiles industry. India is now the world's largest producer and the second largest exporter of cotton. The country is also the biggest consumer of the fibre. The ratio of cotton versus man-made fibres and filament yarn now stands at 59:41. This gap is expected to narrow down in the future, and exert additional pressure on cotton farmers. As things stand, Indian cotton growers have a challenging year ahead with higher production in countries such as the United States, which may keep international prices low. Global cotton production will increase 7 per cent to 113.2 million bales, or 24.65 million tonnes in this crop year which starts from August 2017, after a 9 per cent rise in 2016-17, according to the United States Department of Agriculture (USDA). Moreover, the International Cotton Advisory Committee (ICAC) says that high cotton prices in 2016-17 are expected to encourage farmers to expand the area under cotton by 5 per cent to 30.8 million hectares in 2017-18. After dipping by 3 per cent to 5.1 million tonnes in 2016-17, India's consumption may recover by 2 per cent to 5.2 million tonnes due to competitive prices for cotton yarn products, expanding capacities and the fallout of demonetisation. China will close in since its mill use of cotton may increase by 1 per cent to 7.7 million tonnes, reaching 30 per cent of global cotton consumption. The US may export more cotton, while China might liquidate some of its huge cotton stocks. The ICAC believes that India's exports will decrease by 30 per cent to 886,000 tonnes. The glut in the cotton market will keep prices stable, but on the lower side. The Indian government will therefore have to step in again, and the Cotton Corporation of India (CCI) will need to continue procuring cotton at the minimum support price (MSP). Based on the recommendations of the Commission for Agricultural Costs and Prices (CACP), the MSP per quintal for medium-staple cotton was increased in June by 1 per cent from ₹3800 to ₹3860 and for long-staple cotton from ₹4100 to ₹4160. If the Indian cotton sector is to get a reprieve, it will have to come sooner or later in the form of high demand from the domestic textiles industry.
Man-made Fibres: For years now, man-made fibre (MMF) makers have been seeking a level-playing field. While cotton fibre attracts no duty, there is a12.5 per cent excise duty on MMF; this being a fact that has been repeated endlessly over the past few years. The synthetic textiles sector has on several occasions represented to the government seeking exemption on MMF from excise duty on the grounds that garments produced through MMF are primarily used by the economically weaker sections of society. In fact, this was one of the prime reasons why polyester garments had become popular among the working classes a few decades ago. The demands on excise duty have ranged from a drop of 6 per cent to abolishing it altogether so as to bring it at par with cotton. Moreover, imports of some of the raw materials for producing MMF are taxed heavily, while those of their finished products are taxed lower. While MMF accounts for around 70 per cent of the world's total fibre consumption, they make up for less than a third of domestic demand. Besides, raw materials such as purified terephthalic acid (PTA)-used for making polyester staple fibre (PSF) and filament yarn (PFY)-attract a 5 per cent import duty, apart from an anti-dumping duty. It is not an easy call to take since cheaper imports also squeeze the domestic MMF manufacturers. The anti-dumping duty, on the other hand, has had an adverse impact on small and medium-scale players owing to the wafer-thin margins of polyester yarn/fabric. These apart, Indian man-made textiles are subjected to trade barriers in markets like China, Turkey and Canada. And now with the 18 per cent GST rolling it, the MMF sector is a worried lot. All the more so since India needs to abide by at least some of the rules of the international game. As far as numbers are to go by, the consumption of polyester is expected to be more than double of cotton fibre by 2030. Even though synthetic garments may be more affordable for the middle classes and lower in India, the scope for growth of the sector lies in exports. India is barely able to compete with Vietnam, the bulk of whose apparel exports are made of MMF. In the domestic market too, there is a scope for growth with activewear, womenswear and intimatewear segments-all expanding on their own count and having a substantial MMF component.
Jute: Jute-the golden fibre that is natural, renewable and biodegradable-is second only to cotton in terms of the amount produced. The jute industry in India employs 3.7 lakh workers in organised mills and supports livelihood of 40 lakh farm families. The area under jute cultivation keeps fluctuating and the crop still competes with paddy over land allocation. In February, prices of raw jute fell by 10 per cent over apprehension that the mandatory jute packaging order would be diluted, besides falling crop supplies triggered by demonetisation. In May, the Standing Advisory Committee (SAC) on Jute recommended dilution in jute packaging norms in foodgrains by 5 per cent to 85 per cent in the 2017-18 procurement seasons.
The committee, however, wanted 20 per cent mandatory jute bag packaging in sugar to continue. The dilution was recommended after jute mills failed to supply the requisite quantity of bags in the last two years. With stiff competition from the plastic packaging sector, the jute industry is in a tight corner, especially since packaging constitutes the bulk. Some reprieve came earlier in the year when the finance ministry imposed definitive anti-dumping duty on certain jute products-jute yarn/twine, hessian fabric and jute sacking bags-from Bangladesh and Nepal. The duty-which will be valid for five years-ranged from $6.30 to $351.72 per tonne depending on the producer and country of export. In April, the MSP for raw jute was hiked by ₹300 per quintal to ₹3,500 to boost farmers' income. Despite a bumper crop size of nine million bales (one bale is 180 kg) last year, farmers were in distress over disposal of raw jute stock. Some help came in April, when the Indian Road Congress accepted certain patterns of jute as a geo-textile that can be used for laying/building of roads. As of now, three jute varieties are used as geo-textiles in the construction of roads under the Pradhan Mantri Gram Sarak Yojana (PMGSY). This initiative, once notified in a few months' time, can salvage the jute industry to a considerable extent.
Silk: Few sectors of the Indian textiles and apparel industry have as much scope as silk has. India is the second largest producer of silk in the world at roughly 28,000 million tonnes after China and has a 15.49 per cent share, and there is a huge gap between demand and supply in the country. Roughly a third of the demand for raw silk is met through imports, almost all of it from China. Between April 2016 and February 2017, raw silk worth ₹983.52 crore, silk yarn worth ₹68.63 crore, fabrics/madeups worth ₹209.66 crore and readymade garments worth ₹24.51 crore were imported. And yet, silk production increased in 2015-16 in spite of drought, unseasonal rains, etc. The production of bivoltine silk, which is an import substitute, increased by close to 20 per cent, while eri and muga registered record production levels. This sector arguably has the most diverse forms of governmental interventions ranging from seed organisation systems and quality certification systems to capacity-building programmes and cluster promotion programmes. Yet, it remains in a bind. Sericulture farmers oppose cheap silk from China since it hurts their competitiveness, while the weaving sector complains about the inadequate availability of quality raw silk. It was only in January 2016 that the government imposed a $1.85 per kg anti-dumping duty on mulberry raw silk originating from China to protect domestic industry from the cheap inbound shipments. Chinese silk production itself is expected to dip in the future with sericulture farmers gradually moving towards other sectors there, but to fill that global gap as well as the shortfall on the domestic front, Indian silk production will have to take a quantum jump in terms of volumes. Nevertheless, a lot more work needs to be done if the Central Silk Board is to achieve its target of self-sufficiency in another three years. The multi-reeling machines introduced by the Central Silk Technological Research Institute (CSTRI) have taken off at an impressive rate, but more technological interventions would be needed to promote silk as an alternative
fibre/fabric for the future, especially for smart clothing. And, Indian silk will need to have a brand name too, sooner than later.
Apparel: Indian apparel constitutes a mixed bag. On the one hand, India's share in the global apparel trade has hovered around 5 per cent for a while. That's, naturally, where the scope for tremendous growth lies. On the other hand, since the share itself is so small, fluctuations at the international level do not throw manufacturing life out of gear back home. Apparel itself is the largest component of the industry accounting for roughly 60-65 per cent of the total size in numbers. It is the largest employment generator, especially for the marginalised, unskilled workers and women, directly and indirectly providing jobs to 10.5 crore people. Each ₹100 crore of apparel production generates ₹30 crore of labour income. The apparel sector remains a major foreign exchange earner with a 15 per cent share of India's total exports-₹259,712 crore in 2015-16. India is the sixth largest exporter of apparel after China, Bangladesh, Vietnam, Germany and Italy. The growth here has been minimal in recent times, especially with global apparel trade continuing to reel under recession. The demand conditions in the key importing entities of the United States (US), the European Union (EU) and Japan have remained subdued. India's rather unimpressive growth of 1 per cent in apparel exports (in dollar terms) last year needs to be evaluated in this light. According to ICRA, the subdued off-take by apparel manufacturers, in addition to meagre fabric exports, have been weighing on fabric demand as well. Opportunities, nevertheless, abound. The first is provided by an increase in apparel production costs in China as a result of rising wage costs in that country. According to the World Bank, a 10 per cent increase in Chinese export prices would result in the US increasing its imports from India by 14.62 per cent and from Bangladesh by 13.58 per cent. Moreover, since India is a net exporter of cotton yarn accounting for 30-35 per cent of the production, this can be diverted towards cotton-based apparel manufacturing within the country. This is crucial since the domestic apparel market often gets ignored in discussions. In March 2016, India's retail apparel market was valued at $40 billion, almost all of which is manufactured within the country.
The Backbone
Nonwovens & Technical Textiles: The nonwovens and technical textiles sector is a thrust area for the ministry of textiles. Several schemes have been implemented, and increasing affluence among the middle class population is likely to transform the reach of the industry. It is product quality that provided the initial impetus, and India manufactured 365,000 tonnes of nonwovens in 2016, growing by 17 per cent over the previous year. In 2015, technical textiles accounted for around 29 per cent share of the global textile revenues. Around the same time, the proportion in India was close to 12 per cent. This comparison alone shows the yawning gap that exists now, as also the scope for this sector. India exported technical textile products worth $1.7 billion in 2014-15 with a CAGR of 16 per cent since 2007-08. However, the exports products have not been very research & development intensive. Moreover, India's technical textiles market size accounts for a paltry 4 per cent share of the global market. Currently, a considerable volume of nonwovens is accounted for by low-end, low-priced products such as shopping bags, carpets, etc. The larger scope
lies in high-end usage such as in filtration, automotive, geotextiles and in the hygiene and medical sectors. The major drivers for nonwovens by and large is the same as that for other sectors of the textiles and apparel industry: growing middle class population and rise in disposable incomes of India's population, changing lifestyles and awareness of healthcare & hygiene products. In the near future, disposable home textiles, wet wipes, travel kits, air bags, high-end sports textiles, and disposable medical textiles are expected to grow at a fast pace. A push can come through the Clean India Mission since the hygiene nonwovens segments of sanitary napkins and diapers are still waiting to be tapped. Technical textiles or nonwovens cannot exist in isolation; the growth would depend on demand from other sectors of the economy. However, there is an acute lack of awareness about the technical textiles segment among prospective entrepreneurs and consumers, especially those in the agriculture sector. The textiles ministry has been in touch with the agriculture, urban development, health and surface transport ministries, and is expected to talk to the defence, railways, and heavy industries ministries as well. Technical textiles can be a big boon for agriculture which has been reeling under a crisis, but for that to happen the economies of scale have to work out both ways. And that, in turn, will depend on how soon the sector is able to address the manpower gap.
Handloom: The handloom sector is one of the largest, providing direct and indirect employment to 43 lakh weavers and allied workers. It contributes 15 per cent of the cloth production in the country, and roughly 95 per cent of the world's handwoven fabric comes from India. The socio-economic importance of the sector is underlined by the fact that it is one of the largest livelihood providers after agriculture; it is a grassroots sector. Handloom weaving is present primarily in rural areas and is usually a household activity. Therefore, the most number of government schemes including those providing financial assistance are to spite of the Indian Handloom Brand (IHB) launched in August 2015, the Indian handloom sector is under acute stress. What has happened in the last few years is that visibility in the media has increased, particularly with various strands of Indian handlooms being showcased by designers at various fashion weeks and other events. At the ground level, there is very little to prove as much. The last handloom census was carried out in 2009-10, and with the textiles business, the retail landscape and overall stress in rural sectors that have led to largescale migration to cities and towns, it is imperative for the government to not just generate the numbers all over again, but also to come up with a National Handloom Policy. Versatility, socio-cultural legacy and eco-friendliness are fine in themselves, but the challenges facing the sector are too many: from the number of handloom weavers declining sharply to limited scope of technological upgradation and improvement in weaving activity; and from shifting of skilled labour to other sectors to the younger generation not
adopting weaving due to lower wages and tough working conditions. The flow of registrations under the IHB initiative have varied from a trickle to a glut, but to overcome the challenges the sector will have to be given the Big Push. This is, after all, an impoverished sector. Even according to the last handloom census, weavers have had an average annual income of ₹36,498 for handloom worker households, ₹37,707 for weaver households and ₹29,300 for allied worker households. In all, 36.9 per cent of weavers were under the poverty line. While big portals have earmarked sections for handlooms on their sites, there is a perceptible lack of stable market demand. For handlooms to not just survive, but to transform into a Weave in India initiative, governmental measures like Skill India, Digital India and Brand India will need to dovetail into this sector, and not the other way round.
Textiles 4.0: The future of textiles manufacturing is automation, and automation is already here. It is no more a trend of the future; it is very much a work in progress. Textiles 4.0 is a flamboyant way of referring to the Future of Textiles. It is based on a rapidly spreading expression, 'Industry 4.0', which in itself refers to how the advancements in various technologies are radically transforming industry. The most talked-about these developments is automation, that is not exactly sweeping the landscape, but is definitely making silent inroads across the value chain. In July 2016, a report by The Cotton Textiles Export Promotion Council of India (TEXPROCIL) and Ernst & Young (EY) had outlined three trends. First, increased automation and state-of-the art machines are reducing dependence on labour; second, growing popularity of synthetics is causing a shift in production from spun yarn to synthetic filament yarn, which has lower labour intensity; and third, as the textiles-apparel industry becomes more organised there is higher operational efficiency and labour productivity, leading to lower job creation. Both industry and government will need to handle this deftly, since automation by its very nature is against job creation, something that will have policymakers and economists quite worried. But the truth be told: the latest advancements in robotics has been consistently showcased at textiles-apparel trade fairs for the last couple of years. Machinery companies have been presenting innovative solutions with respect to automation for the various functions in textile and apparel manufacture like ginning, spinning, knitting, weaving, dyeing, finishing and various others. Automation is already playing a crucial role in improving the quality and cost-competitiveness of textiles. Cut-throat international competition and the shifting sands of world trade will sooner or later compel a substantial number of Indian companies to save costs through automation. Then, there is the question of artificial intelligence (that can tilt scales right from factories to retail outlets) and the Internet of Things. Developments on all these fronts have been either slow-paced or taking place more in the back-end of things to be able to make headlines. It is on this front that industry will need to pull up its socks the fastest, and move on to Textiles 4.0.
The Revenues
Trade: The global trade landscape, as far as India is concerned, has changed quite a bit in the last one year. The Trans-Pacific Partnership (TPP) is as good as dead, and clouds of uncertainty still hang over Brexit. The former was good news for India, given that it had been excluded from the partnership and also that apparel rival Vietnam was all set to make the best of the pact. US President Donald Trump's protectionist attitude may also throw the Transatlantic Trade and Investment Partnership (TTIP) into the dustbin. The TTIP, moreover, has met with widespread street protests across Europe. And with Brexit looming large, the European Union (EU) has been forced to take a re-look at its economic partnerships. There has been renewed interest in the last few months over the EU-India free trade agreement (FTA), negotiations over which have been stalled for almost four years now. The contentious issues over which matters had come to a standstill, however, have not gone away. Trade talks have been under way on other fronts, but for India, the EU is important. India is currently negotiating this broad-based Bilateral Trade and Investment Agreement (BTIA) with the EU, and a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA). Fifteen rounds on TEPA have been held. It is expected that greater trade and investment flows will result from these agreements in many sectors, including textiles. The EU is India's number one trading partner (13.5 per cent of India's overall trade with the world in 2015-16), well ahead of China (10.8 per cent), US (9.3 per cent), UAE (7.7 per cent) and Saudi Arabia (4.3 per cent). The EU is also the largest importer of Indian textiles and apparel. Trade gains from the BTIA are likely to be significant for the sector. India is also set to formalise an FTA with the Eurasian Economic Union (EAEU), comprising Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan. Both sides have accepted a report prepared by a joint feasibility study group and formal parleys will begin by July. India's FTA with the EAEU, none of whose members are part of the EU, is expected to open up a big market with a trade potential of $37-62 billion. The current trade between India and the EAEU countries is $11 billion. India has a trade target of $30 billion with the EAEU countries by 2025 and $15 billion of annual investments. The Regional Comprehensive Economic Partnership (RCEP) meanwhile has gained momentum, especially with China steering the negotiations after the setback to the TPP. The Foreign Trade Policy (FTP) 2015-20 that was announced by the government two years ago itself would need a course correction given the developments in the meantime. But then, most have been just developments; no light can be seen at the end of the tunnel as yet.
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