India's ban on imports from Bangladesh through its land ports could generate over Rs 1,000 crore in additional business for the domestic textile industry, opine industry experts. However, it could also raise the prices of certain branded clothing items like T-shirts and denim by around 2 per cent-3 per cent due to supply issues during the winter season, they add.
Issuing a notification, the Director General of Foreign Trade (DGFT) banned the import of garments and several other products from Bangladesh via land routes. However, these goods will still be allowed to be shipped in through the ports of Kolkata and Nhava Sheva.
The local industry had been pushing for restrictions on imports, expressing concern over a double-digit growth in textile imports from Bangladesh due to zero import duties. This move is also expected to curb the backdoor import of Chinese fabric, which otherwise faces a 20 per cent import duty.
This change in import policy will impact Bangladesh more than India, says Bimal Bengani, Chairman-Eastern Region, Federation of Indian Export Organizations (FIEO).
Industry insiders believe, the ban on land route imports from Bangladesh could significantly boost local manufacturing. The industry can now expect Rs 1,000-2,000 crore) worth of those imports to be replaced by Indian manufacturing, says Sanjay K Jain, Chairman, National Textile Committee at the Indian Chamber of Commerce (ICC).
Indian companies have been importing both woven and knitted apparel from Bangladesh to take advantage of the zero-duty benefits.
With this move, the reduction in imports will help strengthen domestic production and support local manufacturers, avers Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation, which represents the entire textile industry value chain.
According to industry estimates, India meets about 1per cent-2 per cent of its apparel consumption through imports, while Bangladesh accounts for roughly 35 per cent of the total garment imports into the country.
This move will also reduce the backdoor entry of Chinese fabrics into India (without duty) that were being processed in Bangladesh and then sent to India duty-free, Jain adds.
Industry estimates indicate, all leading Indian as well as global brands operating in India, source between 20 per cent and 60 per cent of their garments from Bangladesh.
The supply chains of these brands and numerous small and medium-sized enterprises (SMEs) are expected to face short-term disruptions.
Buyers will be impacted as their supply chain will be temporarily disrupted, leading to higher costs and longer lead times, Jain explains.
