Under the South Asian Free Trade Area (SAFTA) agreement, Bangladesh was allowed to export more than 60 products including RMG to India without any duty. The neighbouring country’s share in international RMG market is next only to China. Industrial sources said the value of RMG imports from Bangladesh was $104.25 million in 2014-15.
Apparel industrialists here expressed worry over the duty free import trade of readymade garments (RMG) from Bangladesh. China has taken undue advantage of the free trade and is selling goods to India, they said. Under the South Asian Free Trade Area (SAFTA) agreement, Bangladesh was allowed to export more than 60 products including RMG to India without any duty. The neighbouring country’s share in international RMG market is next only to China. Industrial sources said the value of RMG imports from Bangladesh was $104.25 million in 2014-15. It touched $499.09 million in 2018-19. Though Bangladesh earlier did not take advantage of SAFTA agreement, its exports to India, especially RMG, grew up to 480% in the last five financial years.
The imports from Bangladesh was considered as one of the main factors that caused stagnation in the domestic textile business. Being one of least developed countries, Bangladesh enjoys various trade advantages. Besides that, the neighbour has an edge in cheap labour. All of the factors have given it the second place in RMG exports. Several large players in the Indian apparel industry have established manufacturing units in Bangladesh and involve in exports to countries including India.
But the apparel industrialists said the biggest threat is from China, because many Chinese companies took advantage of the duty-free exports from Bangladesh to India. “We learnt that the textile companies from countries like China provide fibre and fabrics to the units in Bangladesh and get them exported as finished goods to India,” said Apparel Export Promotion Council vice-chairman A Sakthivel.
“China utilise the trade advantages in Bangladesh to sell both its fibre and machines,” a hosiery unit owner said. “Indian government imposes GST on the textile goods sold in the domestic market. But without any duty, the same products from Bangladesh reach our domestic market. The cost difference would be 10-15% between both the products. In case of transportation cost from Bangladesh, it would not be much higher, compared to transporting from West Bengal,” south zone secretary of the Federation of Hosiery Manufacturers’ Associations of India Shashi Agarwal said. Despite various representations, the central government was not taking steps to solve the issue, said Shashi. “The government should imply restrictions and ensure that fibre and fabric utilised for goods imported from Bangladesh is produced and manufactured in that country itself,” Sakthivel said.