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EU's revised RoO vexes fabrics makers in Bangladesh
Apr '11
The Bangladeshi textile industry is hit by the EU's move of relaxing the rules of origin (RoO) for the least developed countries (LDCs) like Bangladesh.

At this time it has been suggested that the domestic fabric manufacturers in Bangladesh should raise their productivity, enhance quality of their products and improve production efficiency to offset the adverse effects of the EU's move on the sector.

EU's new RoO which came into effect from January 1, 2011 has granted clothing exporters of the LDCs, duty-free access to the 27 EU nations, even if they buy fabric from other countries.

With this relaxation, the garment manufacturers from Bangladesh started importing fabrics from other countries like China, at a price lesser that what they would have been required to pay if they would have purchased the same from local markets.

Owing to this, RMG exports to the EU grew sharply during the first quarter of the current year, but the move has adversely impacted the sales of local fabrics, particularly woven fabrics.

A majority of garment makers do not prefer purchasing fabrics from the domestic suppliers, and are importing the same at cheaper rates from foreign countries, which is not allowing the domestic fabric industry to grow at a higher pace.

The earlier RoO for years together,r served as a protective cover for the domestic textile industry, as it necessitated the garment exporters to source major part of the fabrics from the local textile units, if they wished to enjoy the duty-free access to the EU.

However, it is to be understood that, no industry could be shielded for time immortal. Though Bangladesh's backward linkage industry has been shielded for years together since 1990s, and hence now it is the time for the industry to gain self-reliance and get competitive.

It is believed that, when they would start drawing competitive rates for their products, the garment producers in the country would start buying fabrics from the domestic producers. Thus, the local fabric producers need to raise their productivity, boost efficiency and enhance the quality of their products to cash in on the opportunity.

Fibre2fashion News Desk - India

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