The Indian textile industry is up in arms against the government move to allow duty-free access to garment exports from Bangladesh. The concession to Bangladesh, which is a major Indian competitor, could also lead to tax-free entry of Chinese goods into the country, the industry has warned.
India is expected to sign an agreement on duty-free access of apparel productsduring Prime Minister Manmohan Singh?s visit to Bangladesh on Tuesday. Under the aggrement, 48 apparel products from Bangladesh, including knitwear garments would be allowed duty-free access to Indian markets.
?We are shocked to note the Union government?s decision to permit duty-free access for 48 apparel products, including knitwear products exported from Bangladesh under the South Asian Free Trade Agreement (Safta). If the decision is implemented, it will not only affect the domestic market to a great extent, but also to a certain extent our exports,? said A Sakthivel, president of Tirupur Exporters? Association (TEA).
A policy decision to allow duty-free quota for garment imports from Bangladesh should not be taken in haste, said Shishir Jaipuria, chairman, Confederation of Indian Textile Industry, in a letter to PM. Jaipuria also noted that since India was already facing tough competition from Bangladesh in the international market, the local industry needed protection in the home market.
A senior textile ministry official said the PM was aware of the competition India faced from Bangladesh in the export market and the textile industry was also facing tough times. So, the negotiations would be done in keeping with these factors, the official said.
?Bangladesh garment exporters would penetrate the Indian market aggressively if there is a less demand in US & Europe. The Indian garment industry, employs millions of people including women workforce hailing from rural background, will not only loose its market but also put millions of people in great trouble,? Sakthivel said.
Sakthivel said, the Bangladesh garment exports has been showing year on year higher growth rate than India in global market annually, due to its inherent advantages in cost of manufacturing and in last year, 2010-2011, when the Bangladesh garment exports had clocked $15 billion while that of India?s garments export was only $11.16 billion.
Moreover, Bangladesh also get an additional advantage in cost of manufacturing, when they allow import of cotton and yarn under duty free on reciprocal basis.
?We need a level playing field and then only we could withstand the more pressures coming out of imports and geared up ourselves to sustain in the market,? Sakthivel said.
Meanwhile, the apex textile industry body has also made a request to the Prime Minister to first analyse the impact of the move on the domestic industry before allowing duty free access to Bangladesh garments.
The inability of Indian garmenting Industry to face Bangladesh imports stems from the absence of level- playing field caused by structural deficiencies in India?s apparel manufacturing lead by high labour costs, inflexible policies and high operational costs. Calling the duty free access in India for Bangladesh as ?disastrous?, Jaipuria also added that if the government agrees for duty free access then at least there should be a clause that the knitting, spinning and weaving of the fabric used should be done in India.
Fearing the indirect access for China once India bargains with Bangladesh, Jaipuria has also mentioned that ?We are aware that Bangladesh is dependent upon China for fabric supplies and this access will therefore indirectly give access to Chinese textiles to Indian market through Bangladesh.?