The Hindu Business Line : Testing times ahead for Indian apparel exports to EU

New Delhi, Aug. 3 Indian textile and apparel manufacturers could face hurdles while exporting to the European Union (EU) in the coming years when a tough law on chemicals and their safe use comes into force by December 2011, experts here warn.

This will upset the import and export strategies of many besides having a significant impact on supply chain management, they said.

By December 1, 2011, producers or exporters will have to notify the European Chemicals Agency (ECHA) if their goods contain hazardous properties of a substance on the candidate list of a new law called Registration, Evaluation, Authorisation and Restriction of Chemical Substances (REACH).

This will include dyes and pigments. The idea is to improve protection of human health and the environment from the hazards of chemicals.

Companies manufacturing or importing more than one tonne of a chemical substance a year will be required to register the chemical in a central database. The general aim of REACH is to replace these potentially hazardous substances with safer alternatives whenever possible.

Seminars

To spread awareness for the textile industry, the Apparel Export Promotion Council (AEPC) is holding seminars across the country. The first two were held last week in Delhi and Noida. They will be held in Bangalore, Chennai and Mumbai on August 5, 6 and 12 respectively.

Actually, the new regulation came into effect in June 2007 and is being rolled out in phases. The ECHA is authorised to define restrictions for the use of specific chemicals. Experts say this may have significant implication on exports of apparel, textiles and textile polymers to the European Union.

“India is not really geared for such testing at present,” said AEPC’s executive committee member, Mr Hari Kapoor. “The penalties could be severe — as high as €75,000 per consignment or having the entire shipment burnt.”

Mr Kapoor expressed concern over the country’s capacity to test of samples. Currently, there are 10 major laboratories in the country with the capacity to test 20,000-30,000 samples a year. This is half of China’s capacity.

He said policymakers should enact a law making it mandatory for textile firms to supply data to apparel manufacturers; this is not the case today.

Penalties

Companies unable to comply with the REACH could see their market share shrink. The penalties will be country-specific and member-states will impose a penalty for non-compliance, which will be effective, proportionate and dissuasive.

Mr Sudhir Sekri, Chairman of AEPC’s committee on export promotion, said complying with the new law will increase costs. But the industry must move forward quickly as the REACH is aimed at being eco-friendly and sustainable.

Nearly 47 per cent of the country’s garment exports was to the EU. In 2008-09, $5 billion worth of Indian apparels was shipped to the EU.

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