Traders Tense Over Duty Free Access to Pak in EU.

Textile and leather industries of Punjab are tense after the government of India decided to drop its objections in the World Trade Organisation (WTO) general council meeting mid next month against duty free access to 75 Pakistani items in the 27-member European Union.

EU offered the concession for three years to help Pakistan recover from a devastating flood. Pakistan exports around $300 million worth of these items to EU. When the European body offered concession to Pakistan last year, India, Bangladesh and Vietnam objected to it at WTO. Except India, the other countries had withdrawn their objections earlier.

Ludhiana's textile manufacturers Ajit Lakra, Vinod Thapar and Narinder Miglani don't sense any immediate threat. ''Yet Pakistan is good in cotton products and has currency and labour price advantages making it cheaper than Indian goods,'' said Thapar.

Lakra said now there is an all around competition in South Asia as Sri Lanka is also manufacturing quality apparel that are cheaper due to garments special economic zones (SEZ) set up in the island nation. But the labour cost in Sri Lanka is high.

''The only saving grace is that the items produced in Ludhiana have less competition from Pakistani manufacturers than those in Bangladesh,'' said Miglani.

Leather industry around Jalandhar is concerned if the concessions continue for three years, as promised by the European Union (EU), Pakistan may cut into their business. Exports from Jalandhar's leather industry are estimated to be at Rs 240 crore per annum. Director of Punjab Effluents Treatment Society Ajay Sharma said, ''Pakistan is better at handling leather, has cheap and good raw materials apart from having cheaper currency that makes Indian products look costlier. On top of it, if they also get duty free access in Europe, India loses competitive advantage.''

The industrialists see a glimmer of hope because of India's superior marketing capabilities. Many feel that since European economies are not doing well, they won't attract imports from anywhere.

Source : timesofindia.indiatimes.com