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The Southern India Mills’ Association

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India doubles apparel import duty eying China; B’desh exporters see opportunity

Bangladeshi readymade garment exporters, already enjoying duty-free access, see further opportunity in Indian market as the country (India) has doubled the import tax on 328 textile products to 20 per cent, mainly to reduce its imports from China.
India on Tuesday hiked the tax hoping to bring down textile imports to $6 billion in current fiscal year 2018-19 from $7 billion in last fiscal year, according to a Reuters report on Tuesday.
‘The decision of India for doubling import tax on more than 300 textile products will benefit Bangladesh as we have duty-free market access to the country,’ Faruque Hassan, senior vice-president of Bangladesh Garment Manufacturers and Exporters Association, told New Age on Tuesday.
It was obvious that India’s import of textile products from China would decrease due to the tax hike and Bangladesh would be benefited as the next nearest import source, he noted.
Faruque also said that the decision of India would create opportunity for increasing bilateral trade and business between Bangladesh and India.
‘If India increases its import of RMG product from Bangladesh, Bangladesh will also increase its import of yearn, febrics and dies chemicals from India,’ he added.
Reuters reports that India has doubled the import tax on more than 300 textile products as the world’s biggest producer of cotton tries to curb rising imports from China.
It was the second tax hike on textiles in many months after an increase of tax on other products including fibre and apparels last month.
The moves are expected to provide relief to the domestic textile industry, which has been hit by cheaper imports.
Total textile import of India jumped by 16 per cent to a record $7 billion in the fiscal year to March 2018. Of this, about $3 billion were from China, according to Reuters.
The Indian government did not disclose details of the 328 textile products that will be subject to the duty increase announced on Tuesday.
‘It is logical that if India’s textile products import from China decreases, Bangladesh can grab the space. But it is not confirm whether India would meet their demand through import or local production,’ former Bangladesh Knitwear Manufacturers and Exporters Association president Fazlul Haque said.
Bangladesh’s RMG export to India in the financial year 2017-18 increased by 114.68 per cent to $278.67 million, according to the data of Bangladesh Export Promotion Bureau.
Reuters reports that rising imports sent India’s trade deficit with China in textile products to a record high $1.54 billion in 2017/18, alarming industry officials as India had been until recently a net exporter of textile products to China.
Sanjay Jain, president of the Confederation of Indian Textile Industry, told Reuters he did not expect China to retaliate to the Indian duty increases as it still had a trade surplus with India.
He said India’s textile product imports could fall to $6 billion in 2018/19 as a result of the tax hike to 20 per cent.
India’s imports of textile products from Bangladesh, Vietnam and Cambodia also jumped in the last few years as they are not subject to any duty under free trade agreements signed by India with these countries.
The 20 per cent duty will not be applicable to products sourced from those countries due to the FTA, Jain said.
Industry officials say in the last few months Chinese fibre has been shipped to Bangladesh and processed and exported to India with zero duty.
‘Rules of origin need to be implemented for textile products. Otherwise Chinese products will land from other countries,’ said a Mumbai-based garment exporter, who declined to be named.
Jain said India’s textile and garment exports could rise 8 per cent to $40 billion in 2018/19 due to a weak rupee and as the government was expected to introduce incentives to boost overseas sales.
India’s trade differences with the United States have also been rising since president Donald Trump took office.
India, the world’s biggest buyer of US almonds, in June decided to raise import duties on almonds and some other US imports by 20 per cent, joining the European Union and China in retaliating against Trump’s tariff hikes on steel and aluminum. The increased tariff on US goods will be applicable from September 18.