The Indian textile industry is looking towards the upcoming Union budget for signs of stable and supportive trade policies, crucial for boosting exports and attracting foreign direct investment. While the budget is not traditionally the primary venue for trade announcements, it has become a platform for signalling India’s engagement with the global economy. Industry experts suggest that frequent alterations to customs duties, particularly on essential components, create instability and hinder growth. The fluctuating tariffs on mobile phone components serve as a prime example of this volatility, impacting the larger electronics ecosystem of which textiles are a part.

A consistent policy framework is seen as essential for integrating India into global value chains and achieving ambitious export targets. While lower customs duties are a step in the right direction, they are insufficient on their own. The textile sector, like other manufacturing industries, requires comprehensive trade policy reform, including a dedicated body to ensure policy consistency and develop a clear action plan.

The article suggests a reassessment of India’s stance on major trade agreements. While concerns about trade deficits and domestic manufacturing protectionism are prevalent, data indicates that India maintains a surplus in finished goods with several free trade agreement partners. Furthermore, exports of finished goods have often increased following the signing of such agreements. 

Analysis suggests that joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which excludes both the US and China, presents a more balanced opportunity for India compared to the Regional Comprehensive Economic Partnership (RCEP), which is dominated by China. The CPTPP’s focus on quality standards and intellectual property rights also aligns with India’s long-term economic goals. 

However, it is emphasized that trade openness alone is not a silver bullet and must be accompanied by domestic reforms to address structural challenges within the textile industry. A renewed focus on stable trade policies within the budget is seen as a crucial first step.