Parashram J. Patil
India has signed a comprehensive economic partnership agreement (CEPA) with Japan. The objective was to facilitate Japan to import garments from India at zero duty. This gives India’s textile industry a huge opportunity as Japan is the third largest apparel importer in the world. Currently, China is the main supplier of textiles to Japan, while India’s share in the Japanese market is negligible. Recently, there has been a spurt in trade activities between India and Japan after the countries signed a security pact. Japan can be big market for Indian textile and apparel makers that are struggling to step up exports. Indian firms shall focus on developing a partnership with Japanese firms to gain access into their market for fabric and apparel.
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India’s textile industry enjoys several advantages viz-a-viz competing countries such as the availability of raw materials and skilled labour, and low cost of production. The government has allowed 100% FDI through automatic route to strengthen the sector. India has specific challenges in textile trade with Japan. Some of these are the low non-originating material weight of the apparel and quality testing as per Japanese standards.
Possible Policy Interventions
India needs to devise specific policy intervention to improve export performance with Japan such as an increase in quality and productivity, change ISO testing methodology to confirm to Japanese testing standards, promote Korean investment in Gujarat, and woo Korean buyers away from Chinese market leveraging the low cost of production of Indian textile industry.
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Currently, China is facing some challenges in the low-cost apparel manufacturing sector that has affected their export performance. Due to political and economic reasons, Japanese companies are shifting their focus form the Chinese market. India has a competitive advantage in textile sector because it can handle the whole textile value chain effectively. India can develop a long-standing relationship with Japan to boost textile exports.
(The author is an expert in agricultural export policy. He is a consultant with the ministry of commerce and industry.)