BRUSSELS : The European Union (EU) has withdrawn preferential tariffs for several Indian imports, including textiles and apparel, chemicals, leather works, gems and jewellery products and railway equipment, reducing some of the advantage accruing to goods shipped from the country.
Over the years, the EU and the US have withdrawn the preferential duty access for Indian goods as the country saw an improvement in income levels and competitiveness. The duty differential between the preferential access route and the most-favoured nation tariffs is not significant for segments such as textiles, which will now attract 12% MFN (most-favoured nation) import duty instead of 9. 6%. But given the advantage that apparel fromBangladesh has, even this is being seen to be a setback for Indian exporters.
Trade bodies have, however, clarified that not all products mentioned in the list of 10 categories would be covered by the EU decision that will be implemented from next year. The Apparel Export Promotion Council, for instance, has put out an elaborate list where the benefit of preferential tariff will be suspended. It includes material like silk and cotton, carpets and textile floor coverings and knitted and crocheted fabric.
Other trade bodies are also in the process of assessing the impact of the decision, which comes at a time when India and the EU are negotiating an ambitiousbilateral trade agreement.
The trade pact that has been in the pipeline for over a decade got a fresh lease of life after the government decided to pursue free trade agreements seeking to gain some tariff advantage in return for lowering import duties on sensitive items.
Having signed FTAs with Australia and the UAE, the UK agreement is now within sight although some of the ticklish issues need to be thrashed out.
Fieo (Federation of Indian Export Organisations) has approached the RBI seeking an export refinance facility, citing the increase in interest rates. It has written to governor Shaktikanta Das demanding the benefit, arguing that the government is short of funds to provide interest subsidy.