News on the goBrexit: A Potential Setback for the Indian Apparel Export

Brexit: A Potential Setback for the Indian Apparel Export

 Apparel Export Promotion Council (AEPC) expressed its apprehension over UK’s exit of the EU. Mr. Ashok G Rajani, Chairman, AEPC said, “Britain is our largest market in the European union accounting for around 30% of our exports to EU. Its exit would significantly dilute the relevance of EU FTA for us. Also, the expected volatility in the markets and currencies will be coming at a time the industry is trying to revive from a five month decline since January this year.”

All the nations having trade relations with the EU including India are of the opinion that Britain should have stayed as that would have made it easier for them to move money, people and products from around the world. India has been holding negotiations with the European Union to conclude a Free Trade Agreement since 2007. The apparel industry has been eagerly looking forward to the India EU FTA as the most important market expansion strategy as EU has been an important market for apparel. Though its share has come down over the years from 45% to 37%, due to strategic efforts at market diversification, it remains the largest market for India.

 Brexit is not expected to impact the EU FTA process or timelines but the developments in that respect will take a backseat with Britain out of the picture. With Brexit on, the only way to expand business in UK, would be through bilateral negotiations, which would mean a new set of negotiations and a longer timeline.

 At present India enjoys a 20% tariff preference in the EU under its GSP programme. It is to be seen how this gets impacted after Brexit, for exports to UK.  It would also be interesting to see how the competition unfolds in the EU, with countries with zero duty benefit in Eu also loosing out with Britain's exit. 

 The world waits with bated breath to witness the consequences of Britain exiting the EU, which were speculated to have widespread impact on all sectors.

Britain leaving the EU will send shockwaves across the world, not least for its fashion industry, which contributed an estimated £26 billion ($38 billion) to the UK economy in 2014.

The most important consequence of 'Brexit', is a dent to global GDP prospects and damage to confidence. This is likely to develop on the back of downward asset markets adjustments. Hence, more than ever, the industry will have to work on moderating costs and capital expenditure.


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