Rare opportunity to weave a fresh yarn

Textiles have a way of stealing the limelight when it comes to trade with India. Much painful history is tied to India's comparative advantage in the cotton textiles industry and efforts by the country's trading partners to blunt its edge. India has been exporting textiles at least as far back as the Roman Empire, and for most of its history, the trade has been a profitable enterprise. So much so that Britain's industrialisation was built by suppressing the trade advantage to convert India into an exporter of yarn and an importer of cotton textiles. The independence movement is intimately interwoven with the call to buy swadeshi textiles. These scars remain in the nation's psyche, and textiles are a touchy subject in any negotiation for trade the country enters. Textiles still provide the largest employment in India after farming, and if the discriminatory tariffs of recent decades are addressed, the sector can turn into an export powerhouse.

Two trade deals struck in quick succession, with the EU and the US, offer an opportunity to reclaim market share lost to competitors that import cotton yarn, process it, and re-export textiles to the US and EU. Bangladesh enjoys the most preferential tariff dispensation for its exports in the EU and for imports of cotton yarn from the US. With agonisingly conducted trade deals in the bag, India should find itself in the same league of preference in terms of apparel exports and yarn imports. The picture is clouded by the interests of India's cotton farmers, but GoI is assuring them that there are safeguards on the quality and quantity of cotton India intends to import as it scales up its export ambitions.

India is entering a new era in the global trade in textiles, having put considerable effort into levelling the playing field. It must also find the means to reclaim its position in the global trade without excessive reliance on the underlying resources of the textiles industry: land and water. Diversification of cotton cultivation can work to its advantage, as the experience of its competitors bears out.