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Tirupur exporters voice concern over Bangla 'duty-free' garment imports
Sep '11
Exporters representing the Rs. 120 billion Tirupur textile industry, particularly knitwear, have voiced their concern over the duty-free status provided to Bangladeshi garment imports.

According to the exporters, garments imported from Bangladesh cost 20 percent less as compared to domestically produced garments. Hence, the Bangladeshi garments will invade the country's market and local enterprises would be badly hit.

Tirupur Exporters Association (TEA), in a letter forwarded to the Prime Minister, mentioned that the annual growth rate of Bangladeshi garment exports to international markets is growing at a faster pace as compared to India.

The association stated while Bangladesh achieved a mark of US$ 15 billion in garment exports during fiscal 2010-11, India's exports stood at just US$ 11.16 billion.

In spite of roadblocks like scarcity of raw inputs and yarn, Bangladesh's exports remain more than India's due to its low cost of production, mainly because of lower wages.

After permitting duty-free import of cotton and yarn from India on mutual basis, Bangladeshi garment products would become more competitive in the international market compared to Indian garment products.

The exporters raised apprehension that the leading retail outlets in India, rather than purchasing domestic goods, may choose to purchase Bangladeshi garment items that cost 20 percent less.

Following the Madras High Court's ruling directing the closure of all dyeing units in January this year, the textile industry of Tirupur is likely to suffer a loss of around Rs. 35 billion during the current fiscal.

In addition, exporters were already bearing the heat due to slowing down of the US and EU economies and hike in interest rates.

The exporters claimed that a decrease in the cost of raw inputs in Bangladesh has further affected their competitiveness in the international market.

Further, the Union Budget for the 2011-12 fiscal subjected domestically produced branded readymade garments to an excise duty of 10 percent. The duty is levied on the tariff value at 45 percent of the retail price, the exporters stated.

Since cotton yarn exports enjoy a DEPB benefit of 7.67 percent, the price of yarn, imported from India, in Bangladesh is less than the price at which yarn is sold in the country.

Exporters demand that the 10 percent levy of excise duty on 45 percent retail sale value of garments should be rolled back. They also sought additional relief in VAT levied on yarn till introduction of the GST.

The exporters termed the situation as crucial for the entire textile industry, which may lead to high redundancy and result in a crisis.

Fibre2fashion News Desk - India

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