Local industry eyes gains as India restricts Bangladesh RMG imports

It is to be noted that the Indian government had given duty-free access to its neighbouring country during the regime of former Prime Minister Sheikh Hasina. The country’s liberal trade policy boosted the Bangladeshi garment industry. Indian trade organisations have been demanding an end to duty-free access so they can compete on a level playing field. However, the regime change in Bangladesh has strained bilateral relations. The Indian government’s latest move is a reciprocal measure following Bangladesh’s restrictions on Indian yarn imports through land routes.

India’s prominent groups and retailers have been importing cheaper garments from the neighbouring country, according to industry sources.

Sanjay K Jain, chairman of the ICC National Textiles Committee, told Fibre2Fashion, “Currently, India continues to give duty-free access to Bangladesh. It is supplying garments and other textiles worth more than ₹6,000 crore (~$702 million) annually.”

Media reports suggested that more than a dozen trucks are stuck on the Bangladesh side awaiting entry into India, as the government imposed the import restrictions with immediate effect on the intervening night of May 17 and 18. The last truck carrying garments entered India on May 17 and belonged to a large Indian group.

Jain commented on the development, “India hit back against the restrictions by Bangladesh on yarn imports via land routes by restricting apparel imports through the same route. This will increase import costs and shipment times, making it difficult for smaller importers to continue importing garments.” He added, “We can expect trade benefits worth ₹1,000-2,000 crore by replacing Bangladeshi garments with Indian products. Buyers will be impacted temporarily and will have to bear higher import costs. They will need to realign their supply chains and shift their sourcing to Indian suppliers.”

Jain also noted that the move would help reduce the backdoor entry of Chinese fabrics into India through Bangladesh. Chinese fabrics were being converted into garments in Bangladesh to obtain duty-free access to India. Direct imports of Chinese fabrics attract a 20 per cent import duty.

K M Subramanian, president of the Tiruppur Exporters’ Association, said, “Indian government has taken a step in the right direction as the domestic garment manufacturers have been affected due to duty free import from Bangladesh. Cheaper imports from Bangladesh were leading to flooding in domestic market. It also paved the way for Chinese fabric after being converted to garments in Bangladesh. The move will restrict such imports and will support domestic garment manufacturing industry.”

Fibre2Fashion News Desk (KUL)