The trade war between the US and China has opened up a big opportunity for India to increase exports of manmade textiles. India’s manmade fiber exports have been stagnating for the past four years. Exports grew by a marginal 1.9 per cent in fiscal ’19. The trade war has opened up an opportunity, which can help stagnant exports grow by ten per cent to 12 per cent in one-and-half years.
On the other hand, China exports $7 billion worth of manmade textiles to the US. Even if India manages to grab a portion of these exports, and manage to grow by ten per cent, the $6 billion manmade textile exports can move up to $6.6 billion. However to do this the industry needs support. Countries like Vietnam and Bangladesh have signed free trade agreements and preferential trade agreements with some of the key markets like the US and the Europe. Indian industry does not enjoy these benefits. An inverted duty structure for the import of raw materials and finished products is one of the main factors that impede the production and exports of manmade textiles. While raw materials attract an import duty of around 18 per cent, finished products attract only five per cent. Duty-free import of apparels from Bangladesh has been rising in recent months.