The EU-Vietnam Free Trade Agreement (EVFTA), which is to be signed on June 30, will further increase competition for Indian textiles and apparel, according to the Indian Texpreneurs Federation (ITF). The EVFTA is the most ambitious free trade deal ever concluded by the EU with a developing country. It provides for 99 per cent elimination of customs duties.
Once the EVFTA enters into force, 71 per cent of duties will disappear on Vietnamese exports to the EU, and the remainder will be phased out over a period of up to 7 years, according to the decision adopted by European Council recently.
Currently, Vietnam is the EU’s second largest trading partner within ASEAN. In 2017, EU’s garment imports from Vietnam stood at 3.3 bn euro, constituting a 9 per cent share of total clothing imports made by the EU. “The EVFTA will bring down tariff on Vietnamese knitted and woven apparel to zero from the current level of 9.4 per cent and 9.2 per cent respectively. This may bring further competition to us (the Indian textile and apparel industry) along with margin pressures,” ITF said in a statement. “There is an urgent need to improve the efficiency and also move towards value added products,” it added.