Create Value Chains with Nations Getting US, EU Sops: Govt to Cos
Commerce minister says manufacturers should look at Loas, Myanmar, Cambodia
Jaipur: The government is encouraging Indian manufacturers to create value chains with four South Asian countries to benefit from the sops offered by the United States and the European Union to the exporters of less developed countries. Cambodia, Laos, Myanmar and Vietnam or the CLMV grouping gets benefits under the Generalised System of Preferences (GSP) for developing countries, under which imports are allowed at less or zero duty.
“If Indian manufacturers set up businesses in Myanmar, they will get GSP benefits to export in the EU and US,” commerce and industry minister Nirmala Sitharaman said at the Fourth India-CLMV Business Conclave organised by the Department of Commerce and Confederation If Indian manufacturers set up businesses in Myanmar, they will get GSP benefits to export in the EU and US of Indian Industry in Jaipur.
This is particularly important for the textile sector.
Many less developed countries import cotton yarn from India and use it as an input for textile products which they later export to the US and EU. By setting up some part of textile manufacturing outside India, domestic manufacturers will be able to get the export benefits and also create a value chain since they will import the yarn from India.
Moreover, developed countries have been threatening India to end preferential tariffs because of its rising share in world exports. This will provide Indian manufacturers some cushion. India’s total trade with the CLMV countries grew more than sevenfold from $1.4 billion in 2005 to $10.3 billion in 2015.
India’s exports to the bloc grew from $0.8 billion in 2005 to $6.4 billion in 2015. India has a trade surplus with Vietnam and Cambodia, and a deficit with Myanmar and Laos.
An official said that with the US-led Trans Pacific Partnership agreement not working out, it might be easier for India to develop these value chains even though the threat of GSP going away remains. Vietnam is part of the TPP.
The minister said that the move will be fast-tracked with the CII opening offices in Myanmar and Vietnam.
India has been pumping investment in the CLMV countries to tap into their high growth markets, low wage labour and reserves of natural resources, and has already created a Rs 500 crore Project Development Fund to boost investments in the region.
In April-December 2016, India invested $33.5 million in the four countries. The CLMV region saw 7.1% growth on average in 2015 compared with the Association of Southeast Asian Nations’ average of 4.8%. The four countries are part of the ASEAN bloc with which India already has a free trade agreement and is negotiating a broader Regional Comprehensive Economic Partnership agreement that covers 16 countries. (The reporter was in Jaipur to attend the business conclave on
the invitation of CII)