Textile sops for Sri Lanka under FTA

India will grant more concessions to Sri Lanka in the apparel and clothing sector under the existing bilateral free trade agreement. New Delhi has agreed to remove the present annual cap of 1.5 million pieces of clothing per category in the sector.

India has also agreed to grant 100 per cent duty concessions on six million pieces of apparel and clothing items permitted to be imported from Sri Lanka as per the tariff quota agreed to between the two countries. Tariff concession on the six million pieces was 75 per cent so far.

Textiles ministry officials said the concessions had been agreed to at a bilateral meeting in February this year. The revenue department was expected to notify the concessions this week, they added.

Officials said the tariff concessions on another two million pieces would also be increased from 50 to 75 per cent.

India allows concessional imports of up to eight million pieces of clothing and apparel a year from Sri Lanka under the tariff rate quota. Officials said the enhanced concessions had a rider, that the fabric would have to be sourced from India.

Further, the present provision that imports can only be made through the ports of Mumbai, Nhava Sheva (across the harbour from Mumbai), Chennai, Kolkata and Cochin or through inland container depots at Tughlakabad in New Delhi or Bangalore will continue.

Officials pointed out that the move towards more concessions was unlikely to have any adverse impact on the domestic industry as Sri Lanka was not able to utilise even the existing quota.

As per data available with the textiles ministry, Sri Lanka was able to utilise only 7.3 per cent of the total quota during 2003. Of the 8 million pieces allowed to be imported, Sri Lanka's actual imports during 2003 was only 21,221 pieces. Similarly, the quota ulitisation in 2002 was a mere 0.27 per cent.