INDIA: EEC Raises Textile Export Quota

The EU has raised India's textile export quota by 3,500 tonnes, a decision that could increase India's textile exports by $67m (about 1.3 per cent of India's apparel exports). The ruling is to be coordinated under "exceptional flexibility" terms. This means that aggregate quantities remain intact, while only the product mix can be altered. However, in the rapidly shifting world of fashion and foreign trade, this will benefit India's export fortunes. The rise in the EEC's quota will allow Indian apparel exporters to export an estimated five million t-shirts, a million jerseys, two million trousers/shorts, 3.3 million ladies dresses and large quantities of textile yarn and fabric. Current apparel exports from India stand at $5.3bn, 15 per cent of India's total exports (not including services and invisibles). Of this, 76 per cent goes to EEC countries, USA and Canada. Exports to the EEC, USA and Canada fall under the ATC agreement, the successor of the Multi Fibre Agreement (MFA). Under the ATC, each country is allotted a quota for each item. Within these predetermined figures, competitive forces determine all marketing parameters such as price, product and source. Under WTO agreements, ATC will cease on January 1 2005, and, from this date, market forces alone will determine the success or failure of individual exporters.