India announces greater market access for Sri Lanka in Garment Sector

The Government of India has accepted the Sri Lankan request for relaxation in the requirement of fabric sourcing for 5 million pieces of Ready Made Garments (RMG) export to India and necessary approval processes are underway for providing exemption to this condition, the Indian High Commission in Colombo said today.

During the visit Anand Sharma, Minister of Commerce, Industry & Textiles, Government of India, to Sri Lanka in August 2012, the Government of Sri Lanka had raised the issue of relaxation in the TRQ condition for fabric sourcing for 5 million pieces of Ready Made Garments (RMG) export to India and collaboration in Textiles sector for revival of the textiles industry in Sri Lanka. Sharma had promised to give favorable consideration to both the requests.

Following up on the commitment made by Anand Sharma, a high-level delegation led by Mrs. Kiran Dhingra, Secretary, Ministry of Textiles, Government of India, visited Sri Lanka from 18-21 September, 2012. The twelve-member delegation, comprising officials from the Ministry of Textiles, apparel exporters, spinners, fabric exporters and home textiles manufacturers, held further discussions to enhance bilateral cooperation between the two countries in the textiles sector at Government, institutional and business-to-business levels.

During the visit, Secretary, Ministry of Textiles, Government of India made two very significant announcements, which will provide greater market access to Sri Lanka in Indian domestic market in textile and apparel sector.

“The Government of India has accepted the Sri Lankan request for relaxation in the requirement of fabric sourcing for 5 million pieces of RMG export to India and necessary approval processes are underway for providing exemption to this condition. In a few weeks time, the notification in this regard is expected to be issued. Once the notification by the Government of India is issued, Sri Lanka will be able to export 8 million pieces of readymade garments to India at zero duty under India- Sri Lanka Free Trade Agreement (ISFTA),” the Indian High Commission said.

Under the existing arrangement under ISFTA, India has granted two sets of apparel quotas at zero duty to Sri Lanka: 3 million pieces without fabric sourcing requirements from India and another 5 million pieces per year, which should be only made of Indian fabrics. Sri Lanka was able to utilize the 3 million quota fully in the last few years, but was utilizing only 10-15% of the quota for the 5 million pieces.

Further SAFTA duty concessions have been notified on September 6, 2012. Under the revised SAFTA duty regime notified by India for non-LDC countries, Sri Lankan textiles exports would attract a duty of 5% as against the earlier 11%. This will also facilitate greater Sri Lankan exports of readymade garments to India.

These decisions of the Government of India, to provide duty free access of 8 million pieces and reduction of duty under SAFTA framework, have been welcomed both by the Government of Sri Lanka and Sri Lankan industry represented by the Joint Apparel Association Forum (JAAF), as part of the steps taken by India to increase the export capacity of Sri Lanka and reducing the bilateral trade deficit. It may be recalled that India has also offered to collaborate with Sri Lanka in setting up a pharma cluster, a textile cluster and a Special Economic Zone in manufacturing by encouraging Indian investors.
India has an abiding vision of a prosperous South Asia, in which all countries of the region grow together. This implies, on India’s part, providing preferential and asymmetrical access to its markets, without demanding reciprocal concessions. The FTA, signed between India and Sri Lanka in 1998 and operationalized in 2000, was the harbinger of this approach based on asymmetrical obligations.