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CMAI demands rules of origin for import of raw materials

Speaking at the recently concluded 69th National Garment Fair, Rahul Mehta, President, CMAI urged the government to pass rules of origin for raw materials exported to Bangladesh. According to the rules, a minimum amount of raw materials (fabric) used for garment, which are exported from Bangladesh to India, should be made out of materials either manufactured in Bangladesh or imported from India. In other words, materials of third country should not be permitted in garments exported by Bangladesh to India. In addition, Indian apparel industry should also get duty free access to Bangladesh under the FTA. There is good scope of exports of women ethnic wear to Bangladesh.

India has an FTA with Bangladesh, whereby garments can be exported without any payment of duty into India. In the absence of any Rules of Origin, Bangladesh manufacturers are importing duty free fabrics from China, converting them into garments, and exporting in to India – thereby virtually providing duty free access to Indian markets for Chinese fabrics. It is important to note that the imports of garments from Bangladesh has been growing at the rate of 82 per cent over last year, and 161% over 2016-17, and has now reached US$365 million. If this continues, imports of garments from Bangladesh are likely to touch US$3.6 billion by 2024-25.Ironically, exports of garments from India into Bangladesh is subject to a net duty of almost 125%.CMAI has urged the Government to take immediate steps, otherwise if this growth of imports allowed to continue, the industry is set to lose 10 lakh jobs by 2025.

 
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