India’s textile industry, a traditional powerhouse of exports, faces a looming threat from a surge in gold imports. While gold may glitter, its record-breaking import figures cast a long shadow over the vibrant textile sector.
Gold Rush vs. Textile Woes:
- November 2024 saw a staggering four-fold increase in gold imports compared to the previous year, reaching a historic high of $14.86 billion. This surge is attributed to festive and wedding demands, but it comes at a cost.
- The textile industry, which heavily relies on exports, is struggling. Gems and jewellery exports, a significant contributor to the textile sector, witnessed a 25% decline year-on-year in November.
- This imbalance creates a trade deficit, hindering economic stability. The jump in gold imports pushed the trade deficit to a record $37.84 billion in November.
Free Trade Agreement Concerns:
- A free trade agreement with the UAE, implemented in May 2022, is raising concerns. This agreement allows duty-free imports of precious metals from the UAE, potentially impacting domestic businesses.
- Experts warn that this could lead to:
- Revenue Loss: The government may lose significant annual income due to slashed tariffs.
- Shifting Landscape: Traditional import channels like banks might be bypassed in favour of a few private traders.
- Market Disruption: Established textile suppliers could be replaced by Dubai-based firms, impacting the local industry.
A Call for Action:
The Indian government is seeking to review certain provisions of the free trade agreement with the UAE. This action is crucial to ensure a level playing field for both the textile and gold sectors.
The textile industry is a vital part of India’s economy, employing millions and contributing significantly to exports. By addressing the concerns surrounding gold imports and ensuring a fair trade environment, India can safeguard its textile heritage and propel it towards a brighter future.
