Textile industry body CITI today called for imposing safeguard measures to prevent routing of cheaper fabrics produced in countries like China through Bangladesh and Sri Lanka, that have free trade pacts with India.
In a statement, the Confederation of Indian Textile Industry (CITI) observed that the country's garment industry will face stiff competition due to garments imported, especially from Bangladesh where production cost is already less than India.
CITI stated that according to the latest data released by Bangladesh Export Promotion Bureau, India's import of garments from Bangladesh has reached USD 87.4 million during July to November 2017, indicating a sharp increase of 56 per cent from USD 55.92 million during the same period last year.
CITI Chairman Sanjay Kumar Jain pointed out that there is "an urgent need to impose safeguard measures such as Rules of Origin, Yarn Forward and Fabric Forward Rules on the countries like Bangladesh and Sri Lanka that have free trade agreements (FTAs) with India to prevent cheaper fabrics produced from countries like China routed through these countries".
During July to November 2017, India's imports of knitted apparel from Bangladesh increased by 69 per cent while the imports of woven apparel increased by 51 per cent corresponding to the same period last year, he said.
Jain highlighted that the basic custom duty on import of garments from Bangladesh is exempted. In the Pre-GST scenario, import of garment from Bangladesh was attracting cost of Rs 77 per piece (where MRP Rs 999 per piece) and Rs 116 per piece (where MRP is Rs 1,500 per piece) in the shape of CVD + education cess thereon.
However, post-GST (goods and services tax), there is no cost for import of garments from Bangladesh. Similarly, in the case of import of garment from other countries, the cost has been substantially reduced by Rs 77 per piece and Rs 116 per piece where MRP is Rs 999 per piece and Rs 1,500 per piece respectively, he said.
"Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty free and convert them into garments and sell to India duty free.
"This is putting Indian garment industry at a major disadvantage and it is feared that this figure will go up further in the coming days as more Indian Brands shift sourcing from India to low cost duty free countries like Bangladesh and Sri Lanka," the textile body said.
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