EU-Vietnam FTA: India’s labour-intensive export sectors to feel the heat, China may gain

By: Banikinkar Pattanayak | Financial Express  Published: June 29, 2020

Beijing to ramp up investments in SE Asian country, to overcome barriers to its direct trade with EU

The EU, India’s second-largest export destination, accounted for about 17% of the country’s total outbound shipment.

Pandemic-hit Indian exporters, especially in labour-intensive sectors, are expecting their fortune to plummet further, as key competitor Vietnam has clinched a free trade agreement (FTA) with the EU.

The pact will raise competition between the Asian rivals for the lucrative EU market in a range of products such as garments, footwear, marine products, plastics, rubber, leather and coffee (See the chart). Importantly, Vietnam will get duty-free access to the EU for 71% of its goods from day one and 99% after seven years but Indian supplies will continue to attract up to 9.6% duty (the maximum, among the products from labour-intensive sectors, is on garments).

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