China is using Bangladesh to bring its readymade garments to India. How’s that happening!
Bangladesh, which is part of the South Asian Free Trade Area (SAFTA) agreement, is allowed to export over 60 products to India duty-free, including readymade garments (RMG).
However, lately, it has come to light that China is taking undue advantage of this trade leniency to the neighbouring country and apparel industrialists have started expressing their concerns over it.
The value of RMG imports from Bangladesh was US $ 104.25 million in 2014-15 but has risen to US $ 499.09 million in 2018-19 marking a rise of 480 per cent in the last 5 years.
The high volume of imports from Bangladesh is one of the main factors that caused stagnation in the domestic textile business. Bangladesh holds the second largest share in readymade garments in the world, coming in after China.
Upon realising China’s back-handed practices, the apparel industry wants the Government to take necessary measures so that the Indian textile business does not suffer.
“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.
“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 to 15 per cent 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 Government has failed to take steps for improvement.