The recent decision to allow the entry of duty-free garments from Bangladesh has not gone down well with Ludhiana’s textile industry, which terms the decision as “unfortunate” and “unhelpful”. The entrepreneurs lament that the governmental move was driven by selfish bilateral interests between the two neighbouring countries, and regret that it ignored the aspirations of the domestic textile industry in the process.
Prime Minister Manmohan Singh, on his recent visit to Dhaka, had announced duty-free import of 61 items to India from Bangladesh. A majority the pertinent items belongs to textile, especially readymade garments.
Bangladesh is a dominant player in the knitted garment industry, leaving industrialists in Ludhiana to fear that the government decision would affect their market as they too specialise in the same segment. Besides, Bangladesh has easy access to cheap synthetic yarn, which suggests that the garment industry using it will also face tough challenge from cheaper Bangladesh imports.
Ludhiana Knitwear Club says the decision will “undoubtedly hurt” the industry in his city. “Now that the government has allowed duty-free import of items from Bangladesh, our government should at least provide a level playing field for the industry in India,” notes its president Vinod Thapar. “Otherwise, we won’t be able to the survive a highly likely onslaught.”
Thapar does a comparison of the two nations, and says the rate of interest being charged by banks for MSME is more than double in India compared to that in Bangladesh. Also, Dhaka does not levy any import duty on textile machinery, while here it is as high as 19 per cent. “Besides, cheap electricity and labour are comparative advantages that Bangladesh enjoys over India,” he adds.
Ludhiana Knitters Association dubs the government decision as “uncalled for”. Says its president Ajit Lakra: “In the coming years, India will probably be a huge market for textile products consumption, but not to the benefit of domestic players.” Ludhiana’s industry will “soon be relegated to a mere domestic textile industry”, he adds.
Inherent advantages that Bangladesh garment manufacturers enjoy suggest the Indian garment industry will find it tough competing on the domestic front with their peers in Bangladesh. MSME Garment Manufacturers Association of Ludhiana says the government’s decision amounts to “completely ignoring” the interest of the home-grown industry. “Already textile industry here is grappling with multitude problems,” says its president S K Jain. “Now we have another reason to worry.”
