China is exporting textiles to India through Bangladesh to evade import tax, undermining New Delhi’s efforts to support local manufacturers. Earlier this week, India doubled the import tax on more than 300 textile products to 20 per cent, marking the second tax jolt on textiles in as many months.
This is aimed at providing relief to the country’s domestic textile industry, which has been hit by cheaper imports. Total Indian textile imports increased by 16 per cent to touch a record value of $7 billion in the fiscal year ending March 2018. Of this, about $3 billion were from China alone.
Textiles are India’s second largest job provider directly employing nearly 51 million people and accounting for 5 per cent of India’s gross domestic product and 13 per cent of its export earnings.
Imports of clothing accessories and apparel from Bangladesh – the world’s second largest exporter of ready-made garments -rose over 43 per cent to $200.9 million during the year ended March 2018, according to Indian government data.
India, Bangladesh and Sri Lanka are among the signatories of the South Asian Free Trade Agreement (SAFTA) that created a in the South Asian region.