India's RMG imports from Bangladesh fall as rupee dips

23 Jul '12

3 min read

India’s imports of readymade garments (RMG) from Bangladesh have decreased during the past few months due to a sharp decline in the value of Indian currency vis-à-vis the US dollar.

The value of Indian rupee has depreciated by around 20 percent since last September, when the Indian Government allowed duty free imports of 48 textile items from its eastern neighbor, Bangladesh.

According to estimates, the fall in value of rupee has led to a dip in apparel imports from Bangladesh by 60 to 70 percent during the last couple of months.

The removal of import duty in September last year, along with lower labor cost in Bangladesh made imported clothing items cheaper by around 15 to 20 percent as compared to the price of apparels procured from Indian manufacturers.

However, with the depreciation in the value of rupee, Bangladesh has lost the advantage compared to India manufactured apparels.

In the full year prior to the duty free imports were allowed, India imported garments worth US$ 587 million from Bangladesh. However, during September to March 2011-2012, apparels worth US$ 1.8 billion were imported from Bangladesh.

Mr. DK Nair, Secretary General of Confederation of Indian Textile Industries (CITI), told fiber2fashion, “During January-March 2012, there was a substantial increase in imports of textiles and garments from Bangladesh, following the zero duty access allowed by the Indian Government in September 2011.”

“Figures are yet to be released for post-March 2012 period. However, it is quite possible that the decline may have happened because of rupee depreciation in recent months. Future trend may also depend on the exchange rate fluctuation,” he adds.

The President of The Clothing Manufacturers Association of India (CMAI), Mr. Rahul Mehta opines, “The main reason why garment imports from Bangladesh are down is the weakening rupee.”

“When the Indian Government took a decision to allow import of RMG at zero-duty from Bangladesh in September last year, the exchange rate for one US dollar was around Rs. 45, which has now increased to around Rs. 55. This makes imports from Bangladesh expensive by nearly 25 percent,” he adds.

Mr. Mehta further says, “I see the present declining trend of apparel imports from Bangladesh to continue till the dollar value remains at these levels. However, I also see requirements of organized retail sector in India going up in the coming years, and, if the Indian supply chain is not able to ramp up its production, there is a possibility of retailers sourcing some of their requirements from the neighboring country to fill the demand gap.”

Fibre2fashion News Desk - India

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