CITI urges PM to decide on zero-duty access to Bangladeshi garments after proper assessment

06 Sep '11

5 min read

Confederation of Indian Textile Industry (CITI) has asked the Government not to take the policy decision of allowing of duty free quota garment imports from Bangladesh to India in haste.

In a letter to the Prime Minister Dr. Manmohan Singh, Chairman of CITI, Mr. Shishir Jaipuria has said, “We understand … that there is a proposal to provide substantial concessions to Bangladesh on their exports of garments to India. We are aware of the general approach of Government to use trade policy as a tool for achieving geo-political objectives. In our view, such a policy decision needs an assessment of the likely perilous consequences on the domestic garment manufacturing and loss of employment, which the sector generates especially for unskilled female workers. This would also adversely affect the investment in complete textile value chain, which Government of India intends to promote.”

Mr. Jaipuria said that Bangladesh's apparel manufacturing industry is far more competitive than its Indian counterpart. He added that “the in-competitiveness of the Indian apparel industry against Bangladesh can be gauged from the fact that in the last 6 years (2005-2011), India's apparel exports increased by about 5 percent Compound Annual Growth Rate (CAGR) from US$ 8.63 billion in 2005-06 to US$ 12.5 billion in 2010-11 against 18 percent growth recorded by Bangladesh's garment export during the same period. Bangladesh's garment exports increased from US$ 7.9 billion in 2005-06 to US$ 17.92 billion in 2010-¬11 and would cross US$ 25billion target set by Bangladesh within next 3 years.”

He reasoned, “The 45 HS lines for which Bangladesh is seeking zero-duty access in Indian market cover most of their total garment production in terms of quantity. The products for which Bangladesh has sought concessions are also major products for India's domestic production as well as consumption.”

He explained, “India's garment industry is mostly in the small-scale sector and provides employment to over 18 million workers. The upstream segments that supply raw material to the garment industry employ another 17 million workers, mostly in handloom and powerloom sectors of Tamil Nadu, Maharashtra and Andhra Pradesh. Thus, the fate of 35 million workers and a large number of SME units engaged in production of textiles and garments in India is at stake on this issue. There will be severe adverse impact on the garment clusters in Tirupur, Ludhiana and West Bengal.”

The CITI Chairman said that the inability of the Indian Garmenting Industry to face up to Bangladesh imports stems from the absence of level playing field caused by structural deficiencies in India's apparel manufacturing. “Labour cost is one of the chief components of total cost in apparel manufacturing. Bangladesh's labour cost is about one-third of the wages paid to a garment worker in India,” he said.

Secondly, he said, “It is also well known fact that lower size and scaleof Indian garment factory is chiefly due to inflexible labour policies, which stress upon security than availability of employment. Despite continuous representation from the industry for more than a decade and recommendations of various committees formed by Government of India, no policy change has been initiated for the overdue labour reforms.”

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