Exporters from the Rs 12,000-crore textile industry in Tirupur have expressed concern over the duty-free access given to Bangladeshi garments.
The exporters said the garments imported from Bangladesh are 20 per cent cheaper than the garments produced in India. With this advantage, Bangladeshi products will flood Indian market and domestic players would be “killed”.
In a representation to the Prime Minister, Tirupur Exporters Association (TEA) has said the Bangladesh's garment exports were showing higher year-on-year growth rate than India in the global market. In 2010-11, when the Bangladesh garment exports had clocked $ 15 billion, India’s garments export was $11.16 billion only.
The main reason for having more exports than India, despite the lack of raw material and yarn is their low cost of manufacturing, due to lower wages. After allowing import of Indian cotton and yarn under duty free on reciprocal basis, their competitiveness would straightaway additionally get increased against India’s garments in the global market, it said.
“Our concern is that the big Indian retail stores would prefer to place orders with Bangladesh garment manufactures, as Bangladesh products are becoming cheaper than our products additionally by 20 per cent,” they said.
The textile industry is already expected to loose around Rs 3,500 crore during the current fiscal, due to an order passed by Madras High Court in January this year. The order directed all the dyeing units at Tirupur to close down. Further to this, exports have been already suffering due to a slowing down of USA and EU economies coupled with increased interest rates.
In the global market, our competitiveness has been further eroded due to reduced raw material cost in Bangladesh, the exporters said.
In the Union Budget 2011-12, excise duty at 10 per cent was imposed on readymade garments sold under a brand name in the domestic market. The tariff value at 45 per cent of the retail sale price in domestic market attract this duty and this has made our garments costlier, said the exporters.
As the export of cotton yarn is given a DEPB benefit of 7.67 per cent, the yarn imported by Bangladesh is cheaper than the yarn sold in domestic market.
Exporters have asked that the 10 per cent excise duty imposed on 45 per cent retail sale value of garments should be removed. Some relief measures in VAT imposed on yarn is also required until GST is introduced.
Bangladesh is importing yarn and fabric from various countries like China, South Korea, Taiwan and Thailand including India. Exporters made the point that only the garments manufactured out of yarn and fabric imported from India should be given duty-free access and for import of other garments, the customs duty at 20 per cent should be levied.
The situation is really a serious one for the whole textile industry. It will result in huge job losses and may cause a crisis, the Tirupur exporters said.
