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Bangladesh poses a threat to Indian textile exports

India has been pushed to the third position in garment exports during the last financial year (2018-19) way behind the neighboring Bangladesh and Vietnam.

 B’desh and Vietnam far exceed India in garment industry 

While India’s garment exports are struggling at 16.5 billion US Dollars during the last financial year, Bangladesh had bagged orders worth 35 billion US Dollars. Vietnam which had begun garment exports only a few years ago has touched 24 billion US dollars last year according to Apparel Export Promotion Council sources. 

Fourteen years ago Indian garments exports were of the order of five billion US dollars while Bangladesh’s export was around 3 billion US dollars. 

Two years ago the India’s garment exports touched a new low of 16.1 billion us dollars (2016-17) 

Govt must come out with stated policy to help boost exports 

Instead of announcing piece-meal policy measures, Government should come out with stated policy for the next five years to boost exports. This will help manufacturers plan their expansion and achieve scale, the sources said. 

Finance Minister Nirmala Sitaraman had hinted at Special Sourcing concessions for foreign-owned single- and multi-brand but details are not yet out. It will be a big blow if the government eases the current mandatory 30 per cent domestic sourcing norm.Bangladesh which is the world’s second-largest garment Exporter, has seen the value of its overseas sales rise to a record 40.5 billion US Dollars in the year ended June 30. The massive increase in the exports coincides with US President Trump boosting tariffs on Chinese goods to 25 per cent from 10 per cent.

 US-China trade war benefit Vietnam and Malaysia 

The US-China trade war has seen American and Chinese orders for more than half of the 1,981 tariff products so far being re-routed through other countries, including Vietnam and Malaysia. 

Indian garments exports to B’desh attract duty of 125 percent 

Bangladesh, which has signed an FTA with both India and China, has been sourcing fabric duty-free from China and exporting garments to India, thus providing a back-door entry for Chinese fabrics into the country. Ironically, export of garments from India to Bangladesh, attract a duty of 125 per cent.

 The government should ensure that Bangladesh sources a part of its fabrics requirement from India as putting a cap on their export looks difficult, he said. 

For Bangladesh, which aims to double total exports to 72 billion US Dollars by 2024, sharing part of the 41 billion US Dollars of the clothing business that goes to China will provide a fillip to their economy. 

Duty free B’desh garments under FTA affect domestic industry 

Government should come out with a firm policy for the next five years to boost garment exports, says industry players  A huge jump in duty-free garment imports from Bangladesh under the free trade agreement has put the domestic industry in a fix. This comes amidst slowing domestic demand and banks curtailing credit to 80 per cent of MSMEs (micro, small and medium enterprises) in the sector.

 Import of garments to India from Bangladesh was up 82 per cent to 365 million million US dollars last fiscal. It has been growing steadily at a CAGR (compounded annual growth rate) of 52 per cent and is expected to touch 3.6 Billion US Dollars by 2024-25. This will render about 10 lakh people jobless with most of the small garment industry shutting shop.



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