A report from the Global Trade Research Initiative (GTRI) has highlighted that India's exports from labor-intensive sectors like textiles, garments, gems and jewelry, and leather have experienced a deceleration, despite the presence of previous free trade agreements (FTAs). This slowdown is attributed to the increased market share gained by efficient suppliers from China, Vietnam, and Bangladesh in global trade.
The think tank identified non-tariff barriers (NTBs) imposed by consumer nations as one of the primary factors contributing to the sluggish exports in these sectors. It suggested that India should leverage its ongoing negotiations for free trade agreements to eradicate such barriers. NTBs refer to trade restrictions such as regulations or quotas aimed at limiting imports, without relying on tariffs explicitly.
Amid India's engagement in signing free trade agreements with developed nations like the UK, the GTRI cautioned that simply entering into such agreements may not necessarily lead to an increase in the country's exports of labor-intensive goods. The GTRI cited India's apparel exports to Japan as a case in point. During the negotiations for the India-Japan FTA in 2008-2010, it was anticipated that if Japan were to eliminate tariffs completely post-FTA, India's apparel exports to Japan would witness a substantial surge. Both nations agreed to abolish tariffs on all apparel items from the onset of the India-Japan FTA. However, data spanning the last 12 years indicates that the anticipated benefits did not materialize as expected, according to the GTRI.
Earlier in the year, the Federation of Indian Export Organisations (FIEO) expressed concerns regarding India's export performance across labor-intensive sectors over the past five years. They noted a troubling trend of declining global market share in these sectors. FIEO also pointed out that India's export growth in recent years has primarily been driven by a redirection of crude oil trade routes through India to Europe. However, they cautioned that this trend may not be sustainable in the future.
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