India’s imports of readymade garments from Bangladesh grew 56 per cent during July-November 2017 over the same period previous year. Knitted apparel imports from Bangladesh rose 69 per cent, while women’s apparel imports grew 51 per cent.
In the pre-GST era, import of garments from Bangladesh attracted a countervailing duty and education cess. However, in the post-GST scenario, there is no cost of import of garments from Bangladesh. This unilateral duty-free market access given to Bangladesh facilitates the entry of Chinese textiles into India. Textile raw material from China comes to India via Bangladesh, which has a free-trade agreement with India. Duty free fabric from China goes to Bangladesh, gets converted and lands into India at zero duty.
China is said to be selling organic fibers. The industry in India wants to develop and promote its cotton fiber as green fiber which is manufactured through environment friendly methods and zero discharge processes. Trade bodies, which expect textile imports from Bangladesh to rise further, want India to introduce a rule of origin for duty free imports. Competition from China is forcing some businesses, such as polyester production facilities, to run idle, leading to job losses.
Almost 50 per cent clothing accessories and apparel made in Bangladesh are made with Chinese fibers.