The India-UK Free Trade Agreement (FTA) could offer a billion-dollar incremental opportunity for the Indian apparel segment as the pact creates a level-playing field for India with countries like Bangladesh and China, which currently are bigger apparel exporters to the UK, said Sivaramakrishnan Ganapathi, Vice Chairman & MD of Gokaldas Exports.
“I see this as almost a billion dollar opportunity for India… Bangladesh's exports to UK, it's almost $4 billion. China's exports is $5 billion, and India is about $1.5 billion, or something like that,” he said during an interaction with CNBC TV18.
“Bangladesh is large thanks to FTA, thanks to duty free access to UK market… They have a 12% advantage over India, which now through this FTA is nullified. So, we get a level-playing field with Bangladesh. And currently, Bangladesh itself is facing some problems related to its own internal stability. On top of it, if India gets a level-playing field with Bangladesh through this FTA, there is a good likelihood that a lot more orders will get spread out between Bangladesh and India,” explained Ganapathi.
On May 6, India and the UK secured a long-pending FTA with Indian exports set to benefit from duty elimination on about 99 percent of the tariff lines, covering almost 100 percent of the trade value. Further, the FTA is expected to boost exports of labour and technology intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery.
Elaborating further on the potential benefits of the FTA, Ganapathi said that UK has a large Indian diaspora and several UK brands were already experimenting with Indian companies, which could get a fillip due to the trade agreement in place.
“India has got a historically great affinity with the UK. There is a large Indian diaspora. UK understands India… if we get a duty free access into that country, I presume that there must be a lot more opportunity to source from India. In anticipation, several brands have been sourcing from India market now, this will get an incremental fillip and will rise very quickly,” he said.
Incidentally, most of the textile stocks were in the limelight on Wednesday, gaining strong ground following the improved sentiment around the sector on the back of India-FTA agreement.
Vardhman Textiles, Welspun Living, Arvind, and Raymond Lifestyles among others gained ground and closed in positive territory. While Welspun Living gained nearly 12 percent, Raymond Lifestyle was up more than six percent on Wednesday.
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