High costs, stiff labour laws drive textile mills to B’desh
The list is expected to grow once more mills manage to tide over the current liquidity crisis, stoked by a sudden slump in product prices in 2011 following two successive years of a steady rise in raw material costs. It’s because India allowed duty-free access to 48 textile and apparel products from Bangladesh last year.
“During the course of a recent meeting in Bangladesh, I realised there were more Indians in the meeting than natives of Bangladesh. I asked the owner of a big Indian firm, who was present in the meeting, and he said he was adding to staff there,” says a senior textile ministry official.
“Labour cost is at least 30% cheaper in Bangladesh than India and labour laws very flexible. Duty-free access is a big advantage,” says DK Nair, secretary general, Confederation of Indian Textile Industry.
Bangladesh also offers incentives to run garment units, says Rahul Mehta, president, Clothing Manufacturers’ Association of India. “You can import fabric from China at zero duty if you are based in Bangladesh,” he adds. The government support there is so much that imported capital equipment are exempt from tax, while other industries are required to pay high duties for the machinery they require, says another
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