Abstract:
This paper reports findings from the survey of India’s textiles and clothing exporters. The survey method
has been used to identify and assess the impact of Non-Tariff Measures (NTMs) and the Cost of
Compliance (COC) expenditure by the exporters. A structured questionnaire has been used to gather
data from a sample of 135 exporters across eight export centers of India i.e. Bangalore, Chennai,
Coimbatore, Ludhiana, Mumbai, New Delhi, Panipat and Tirupur. Results reveal that the EU and USA
are most restrictive region/country covering nearly three-fourth of total NTM incidences. The technical
regulations, product & production process standards and conformity assessment for technical barriers
are the most frequently used NTMs among the aggregated five categories. The average COC as
percentage of turnover is inversely related to the firm size, which is 0.63% for large firms and 1.32% for
small firms. However, about 58% of the firms spend less than 0.5% of their turnover on COC which is
much lower than overall average of 1.12% and only 26% firms spend more than 1% of their turnover in
complying with NTM standards. The COC is not exorbitant and justifiable given its long term benefits.
Some of the common issues about NTMs are buyer nomination of the suppliers and testing &
certification agencies, stringent social compliance measures, and discriminatory treatment on the basis
of standards, import duty and other benefits. Unexpectedly, the NTMs are not only seen as marketing
and promotional tool but also they promote efficiency and competitiveness within the industry. Further,
financial crisis has reduced the export orders/volumes and the impact is more severe on high end
fashion garments where product and market diversification is unlikely due to ever changing customer
preferences.
