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Indian apparel units considering relocation to Bangladesh
14
Nov '11
A large number of apparel manufacturers from India, particularly form Indore in Madhya Pradesh, are considering relocation of their production units to Bangladesh in view of low cost of labour, cheaper power tariffs and the recent decision of the Indian Government to allow duty-free import of garments from Bangladesh.

Speaking to fibre2fashion, Mr. Gautam Kothari, President of the Pithampur Audhyogik Sangathan based near Indore, said, “It is the cost factor that is forcing garment units from this region to shift their base to Bangladesh. In Bangladesh, the minimum wages of workers is Rs. 50 with more availability of labour compared to India. In India, the wages vary from Rs. 112 in some States to Rs. 145 in few States and the availability of workers is also a problem because of government schemes like NREGA and free distribution of food grains.”

Citing electricity charges as another reason, Mr. Kothari said, “In Bangladesh, the power charge is Rs. 2.10 per unit while in India it is Rs. 5-8 per unit, varying from State to State. This increases the cost of production in India.”

“Moreover, the recent decision to allow duty-free import from Bangladesh has made garment producers to rethink about continuing their production in India. They can as well go to Bangladesh, place their order and get the finished goods imported from Bangladesh,” he added.

“The relocation of garment units to Bangladesh may not have any immediate impact on the Indian industry, but if the trend persists for more than 2-3 years, it may lead to the collapse of the Indian garment manufacturing industry,” according to Mr. Kothari.

In order to save the industry, Mr. Kothari said, “There is a need to re-think on our policies and if a manufacturer is having additional costs, then the Government should subsidize it either directly, or indirectly through providing subsidy on electricity charges.”

“We will continue to finance garment units, even if they are shifting their base to Bangladesh, if they are good and viable units,” quips Mr. Narayan Murthy, General Manager – Large Corporate & International Division, Indian Overseas Bank (IOB).

Mr. Shailesh Goenka, Director, Texport Industries Pvt. Ltd. adds, “It is not only units from India, but a lot of business from China has also shifted to Bangladesh owing to lower cost of manufacturing there.”

Fibre2fashion News Desk - India

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