With the referendum to quit European Union, the impact on India’s textiles export to Great Britain will be minimal although it is a major market for apparels made in India. However, there could be initial turmoil due to structural changes and fresh negotiations being finalised. In perspective, EU imported textiles worth $235 billion in 2015 from the world. Of this, UK accounted for 15 per cent or $35 billion. Thus, the country is one of the largest markets for textiles including fibres, yarns, fabrics, apparels and other textile products. However, it is not a major supplier of this industry and thus will have negligible impact on sourcing.
For India, export to UK account for less than 7 per cent of total textiles but more than 10 per cent in case of apparels. In 2015, exports to UK aggregated $2.41 billion including $1.81 billion of apparels alone. This shows that trade between India and UK becomes pertinent for apparel. Although it is a large market for India, it is more or less saturated now. But it will be a growing market for high value-added products in the coming years.
However, garment exporters are a worried lot. Post separation they want a trade treaty with Britain. A free trade agreement (FTA) will be paramount to boost garment exports to the UK. Knitwear exporters are also pitching for FTA with the EU, also want a separate pact with the UK. India currently enjoys a 12.5 per cent tariff preference in the EU under its generalised scheme of preferences programme.
The initial woes are that Britain will have to negotiate the terms and conditions of the trade with different countries. The process is more complex and involves lot of interdependent variables, like which country is a largest trades partner, which one exports more to it or buys from it, etc. It may take years to settle this. The immediate impact of Brexit was the sharp plunge in value of Pound Sterling. The Pound fell to a 31-year low of £1.315 on June 27 – the lowest level since 1985 while Sterling sank to its weakest point since 1985. This can impact buying potential of Britain’s consumer as they will have to spend more to buy apparels.
If one looks back at trade between India and UK during the financial crisis of the previous decade, the impact continued until 2010, where textiles exports moved wavered between 2007 and 2010 as the chart alongside depicts. XSTOK.com is India’s first b2b marketplace for textile surplus. It currently has 9,000 registered buyers from across the country and also has on-boarded more than 400 premium producers (mills) like Arvind Mills, D’décor, Oswal, Mafatlal, etc.