Indian government hiked duties to check textile imports from China which has resulted in the expansion of export from Bangladesh to India. Indian Textile Industry believes that cheaper Chinese products are getting access in the Indian market via Bangladesh which is affecting the business.
The labour unrest in Bangladesh seems to have little impact on exports. As per the data from Bangladesh Export Promotion Bureau apparel exports from the country to India grew 143 percent between July and December to $270 million from $166 million in the same month last year.
Sanjay Jain, chairman of Confederation of Indian Textile Industry said: “Under the free trade agreement with us, imports from Bangladesh are not subject to any duty. We suspect that Chinese fabric is making a backdoor entry through Bangladesh as garments. We have asked the government to implement the rule of origin provision for imports from Bangladesh.”
Bangladesh’s government had doubled the duties to 20 percent for over 300 textile products, ranging from fibre to apparels to check rising imports of cheaper products from China. After the implementation of GST, Imports started increasing. In the post-GST, effective duty rates came down as the countervailing duty of 12 percent was removed.
India’s textile imports jumped 16 percent to a record $7 billion and of this approximately $3 billion is from China in the previous year.“Cheaper imports are a threat to the existence of MSMEs, which is the backbone of India’s textile industry,” said Jain.
Bangladesh’s Apparels are up to 30 percent cheaper than Indian products because of cheap labour. Moreover, Bangladesh can get affordable fabric from China. The fabric constitutes 75 percent of the cost of apparel, cheaper fabric adds to the savings. Apart from fabric, proximity is an advantage that supports shipping products easily from Bangladesh to India.
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