Apparel exports from Bangladesh to India have gone up by 17 per cent from April to August 2019. This has impacted small players 80 per cent of the industry is still in the micro, small and medium sector. India’s apparel imports from Sri Lanka, on the other hand, have declined by two per cent over the same period.
To add to India’s problems, China has entered the picture. Free trade agreements with Bangladesh are encouraging duty-free imports of Chinese fabrics, with Bangladesh importing duty-free fabrics from China, adding value, and exporting duty-free to India. With Sri Lanka, India has a duty free agreement, but only up to eight million pieces.
The Indian apparel industry is worried about duty-free imports of readymade garments from Bangladesh. Bangladesh can export more than 60 products including garments to India, without any duty, under the South Asian Free Trade Area agreement. These exports have grown 480 per cent in the last five fiscal years. Textile goods produced and sold in India are subject to GST. However, the same products from Bangladesh reach India without any duty and so there is a 10 to 15 per cent cost difference between the products.