Chinese garments are coming to India via Bangladesh. Cotton garments such as trousers, shorts and shirts and cotton T-shirts are among the top four imported items from Bangladesh. This surge is catching up in synthetic textile products as well, at a much faster rates. The high volume of imports from Bangladesh is one of the main factors that has caused stagnation in the textile business in India. Bangladesh holds the second largest share in readymade garments in the world, after China.
Textile companies from China provide fibers and fabrics to units in Bangladesh and get them exported as finished goods to India. Bangladesh can export over 60 products to India duty-free, including readymade garments. The value of garment imports from Bangladesh into India has risen 480 per cent in the last five years. China is seen as taking undue advantage of this trade leniency to Bangladesh.
India imposes GST on textile goods sold in the domestic market. But the same products from Bangladesh reach the domestic market without any duty. The cost difference works out to be ten per cent or 15 per cent. Even the transportation cost from Bangladesh is negligible compared to transporting from, say, West Bengal.