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The Southern India Mills’ Association

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Is Chinese textile products making backdoor entry through Bangladesh?

Chennai: After the government increased duties on textile products to check cheaper imports from China, apparel imports from Bangladesh has more than doubled. Industry suspects that Chinese products are making a backdoor entry into the country through Bangladesh.
Despite a spate of labour unrest in Bangladesh, apparel exports from that country to India grew 143 per cent between July and December to $270 million from $166 million in the same month last year, as per the data from Bangladesh Export Promotion Bureau.
Value of knitwear exports rose 107 per cent and woven garment exports by 161 ssper cent.
“Under the free trade agreement with us, imports from Bangladesh are not subject to any duty. We suspect that Chinese fabric is making a backdoor entry through Bangladesh as garments. We have asked the government to implement the rule of origin provision for imports from Bangladesh,” said Sanjay Jain, chairman of Confederation of Indian Textile Industry.
The government had doubled the duties to 20 per cent for over 300 textile products, ranging from fibre to apparels, in August, mainly to check rising imports of cheaper products from China. Imports started increasing after the implementation of GST. The effective duty rates came down as the countervailing duty of 12 per cent was done away with post-GST. In FY18, India’s textile imports jumped 16 per cent to a record $7 billion and of this around $3 billion came from China.
“Cheaper imports are a threat to the existence of MSMEs, which is the backbone of India’s textile industry,” said Jain. The industry had expected that the imports will come down by at least $1 billion this year due to the increased import duties. However, Bangladesh imports have now become a growing threat.
Apparels from Bangladesh are up to 30 per cent cheaper than Indian products as the labour cost is significantly lower there. Further, Bangladesh can get cheaper fabric from China. As fabric accounts for 75 per cent of the cost of apparel, cheaper fabric too adds to the savings. Proximity is an added advantage when it comes to shipping products from Bangladesh to India.
Bangladesh expects the imports to rise in the coming months as well.