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Indian Textile industry wants Bangladesh to import garments and yarn from them

Alarmed over Bangladesh textiles flooding the Indian market ever since GST came to force eight months ago, the Indian textile industry has urged the Commerce Ministry to modify the SAFTA (South Asia free trade area) rules pertaining to origin making it mandatory for Dacca to source yarn and fabric from India to claim quota free exports to India. The Textile industry has sent a representation to the Commerce Ministry in this regard recently.

Currently Bangladesh textile industry sources yarn and fabric at cheap cost from China. Bangladesh uses cheap labor, import fabric from China at cheap cost and avail of quota benefits in India and dump their products in the Indian market in a big way. The garment imports from Bangladesh increased by 66 per cent to touch 111.3 million US Dollars during July December 2017. While the Knit apparel imports increased by 77 per cent, Woven apparel imports went up by 65 per cent during the same period. 

As China is taking advantage of the facilities provided to least developed countries like Bangladesh to dump their garments and yarn, the only way to tackle the issue is to tweak the SAFTA rules making it mandatory for Bangladesh to procure yarn and fabrics from India if their textile exports want to enjoy the duty free quota benefits in the Indian market..

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Tweaking SAFTA rules of origin to make use of yarn and fabrics of Indian origin mandatory for allowing duty-free, quota-free market access will prevent China from taking undue advantage of a facility that is meant for poor LDCs (least developed countries),” said a spokesman of the Indian Textile Industry. At the same time, it will give a boost to India’s export of yarn and fabrics to Bangladesh and other LDCs, which at present are being supplied by China..

India will not be the first country to impose such sourcing restrictions for allowing duty-free import of apparel. The US has imposed sourcing restriction under for accepting duty-free import of garments from Mexico and other countries. India allowed duty free import of readymade garments from Bangladesh under SAFTA in 2006. Earlier, this facility was limited to 8 million pieces per annum. This restriction was removed in 2010.  Imports from Bangladesh have been growing at a steady pace ever since and gained momentum in mid-2017.


Bangladesh imports Chinese fabric, converts them into garments using its cheap labor and exports them to India without paying any duties. Since import of ‘Made in China’ fabrics is meant for exports Bangladesh doesn’t impose import duties.

 

The unilateral duty free market access given to Bangladesh is actually facilitating backdoor entry of Chinese textiles into India,” the textile industry in its representation to union commerce minister Suresh Prabhu recently.

 

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