Indian textile manufacturers and exporters last week again cautioned the government against opening up the domestic market to China under the proposed Regional Comprehensive Economic Partnership (RCEP) agreement. In a meeting with the commerce and industry ministry, they pointed out added competition from cheaper Chinese goods may put pressure on domestic sales.

International textile business has already been under threat from Bangladesh and Vietnam, they noted. The government reportedly assured them their interests will be protected.

RCEP is India’s most ambitious trade pact, currently under negotiation. Based on India’s existing free trade agreement (FTA) with the 10-nation bloc of the Association for South East Asian Nations (ASEAN), RCEP will include all the nations with which the Asean has trade deals — New Zealand, Australia, China, India, Japan and South Korea.

At the last such meeting on RCEP, the Confederation of Indian Textile Industry (CITI) had cautioned the government to tread carefully while ceding space to China in the global textiles and clothing sector. Half of India’s trade in this sector in RCEP is with China, with which it had a big trade deficit of almost $1 billion in 2018, it had said.

Export of readymade garments, in which India’s export competitiveness has fallen over the past fiscal year, contracted by 2.44 per cent in August.

However, CITI said while the US-China trade war offers an opportunity to Indian textile manufacturers to enhance their exports to the United States, China too would be looking for new markets for its products. This is true for the fabrics sector, where opinion regarding RCEP seems to be divided. China, South Korea and major ASEAN markets may become large destinations for the fabric industry.

The Apparel Exports Promotion Council has suggested some caution be exercised during the talks on reducing tariffs for textile products.

So far, RCEP talks have seen 28 rounds of negotiations, apart from seven minister-level meets. New Delhi has apparently made it clear that significant tariff concessions have already been made and further talks would be based only after an equal push by China. Meanwhile, India is preparing a final list of products on which it may retain import tariffs for China.