Free trade deal with Australia will be beneficial to Indian garment and home textile exporters . China accounts for almost 60% of textile imports into Australia, with India accounting for 5-6 percent .
According to India Ratings and Research (Ind-Ra), the free trade deal signed with Australia, which takes effect on December 29, will be beneficial to Indian garment and home textile exporters, since it was only 5% earlier.Given that China accounts for almost 60% of textile imports into Australia, with India accounting for 5-6 percent, Ind-Ra expects the volume of exports to increase even higher in 2023 and thereafter, depending on producer capacity.According to the agency, a long-term move for meaningful volume increases, which encourages incremental capital investment, would necessitate the availability of domestic sources of cotton and a long-term outlook of demand.The presence of domestic sources of cotton and a long-term view of demand may encourage domestic entities to diversify exports and better manage demand cyclicality.
In FY22, India exported a substantial amount of low value-added products to China, Bangladesh, and Vietnam, which use them to value add and export to countries such as Australia and other potential FTA partners, according to it.India expects the removal of these tariff barriers through FTAs to improve the country's ability to produce value addition and raise the number of such products in the overall export basket.This will improve the process of diversification and reduce the inherent cyclical nature of the business, the ratings agency said, and that a reduction of tariff burdens and restructuring will probably occur over time as China, Vietnam, and Bangladesh maintain major market share in Australia's import basket, hence, putting an emphasis on sustainable practices such as the use of green energy.