After failing to convince the government against allowing duty-free imports from Bangladesh, textile manufacturers are looking to set up a base in that country. The government recently allowed duty-free imports of 48 textile items.
“Currently, many manufacturers and retailers are exploring the opportunity and are now studying the market there,” said Rahul Mehta, president of The Clothing Manufacturers Association of India. Labour in Bangladesh is also cheaper, compared to India. This will help manufacturers cut their cost of production.
Retailers like Creative Group are looking at setting up a base in Bangladesh, Mehta said. Globus, Reliance, Arvind Mills and Madura Fashions & Lifestyles are also looking at doing the same, according to sources familiar with the matter.
Textile manufacturers had initially pleaded with the government to refrain from allowing duty-free imports, as it would result in imports of $2.5 billion a year, in addition to a loss of 1.25 million jobs.
The apparel industry is the largest employment generator with six million people employed. Bangladesh is a cheaper destination to manufacture apparel and other textile products as the cost of production is around 20 per cent lower compared to India.
Exports from Bangladesh are higher compared to India. India has been losing out to Bangladesh since 2009. Bangladesh exports grew at 16 per cent in 2010-11, while India's exports grew at four per cent.
“Manufacturers will not cut their production in India, but, will set up a base to manufacture basic textile items in Bangladesh. India is good at producing value added textile products,” said the director of the Apparel Export Promotion Council.
