Can India overtake Bangladesh in EU textile exports?, Pg7

Key Highlights:

• India's textile exports to the EU are concentrated in intermediate products like yarns and fabrics, while Bangladesh dominates in finished garments.
• India's share of EU's knitted/crocheted garment imports decreased from 6.5% in 2009 to 4.4% in 2023, while Bangladesh's increased from 6% in 2000 to 26% in 2023.
• India's nominal export value of woven garments to the EU fell from $3.5 billion to $2.9 billion.
• Bangladesh is set to lose its EBA benefits in 2029, potentially facing MFN tariffs of around 12% on apparel exports to the EU.
• The recently finalized India-EU FTA grants India duty-free access to the EU's textile markets, subject to the double-stage processing requirement.

Detailed Insights:

• Indian garments struggle to compete with Bangladesh in the EU market due to higher unit values, possibly indicating better quality or structural disadvantages like higher production costs and logistical inefficiencies.
• Bangladesh enjoys duty-free, quota-free access to the EU under the Everything But Arms (EBA) scheme, even without meeting the EU's standard 'double transformation' requirement.
• India faces EU Most Favoured Nation (MFN) tariffs of around 12%.
• Bangladesh may seek entry into the EU’s Generalised Scheme of Preferences Plus (GSP+), which offers zero tariffs on textiles but has stricter rules of origin.
• The India-EU FTA presents an opportunity for India to revive textile exports, especially with Bangladesh losing its preferential advantage and India reducing its tariff disadvantage.
• Vietnam's apparel exports surged after the signing of the EU-Vietnam FTA in 2020, indicating potential opportunities for India.

Key Concepts Involved:

• EBA (Everything But Arms): An initiative by the European Union that grants duty-free and quota-free access to the EU market for all products (except arms) from Least Developed Countries.
• MFN (Most Favoured Nation): A principle in international trade where countries guarantee each other the best trade terms they offer to any other trading partner.
• GSP+ (Generalised Scheme of Preferences Plus): A special incentive arrangement under the Generalised Scheme of Preferences (GSP) that offers tariff reductions to developing countries that implement international conventions on human and labour rights, environmental protection, and good governance.