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Bangladesh import curbs won't hurt Indian textile majors, say experts
Industry experts say that Indian companies can easily replace Bangladeshi goods through domestic sourcing, as the quantity is minimal.
According to the Indian Texpreneurs Federation (ITF), an industry association, India imported around $618 million worth of woven and knitted apparel from Bangladesh during the 11-month period up to February in the last financial year.
Bangladesh's share in India's apparel imports stands at around 35–40 per cent.
'Due to the zero-duty advantage, Indian retailers have been extensively importing garments from Bangladesh. A reduction in such imports is expected to strengthen domestic production and provide vital support to local manufacturers across the value chain,' said Prabhu Dhamodharan, convenor of Coimbatore-based ITF.
Based on a notification by the Commerce Ministry, dated May 17, imports from Bangladesh will only be allowed through Mumbai's Nhava Sheva and Kolkata's seaports. This will make Bangladeshi goods even more expensive, acting as a disincentive for Indian importers.
'The move will increase cost, lead time, and make it difficult for small importers to manage. Currently, India has given duty-free access to Bangladesh, and more than ₹6,000 crore is coming annually from that country. Restrictions on that mean at least ₹1,000–2,000 crore of that may be replaced by Indian manufacturing,' said Sanjay Kumar Jain, managing director (MD) of textile producer TT Ltd.
Experts highlight that this move would also reduce the backdoor entry of Chinese fabrics into India (without duty) that were getting converted in Bangladesh and being sent to India duty-free. Chinese fabrics, if imported directly from China, have 20 per cent import duty.
A dominant retail player in India said that it will start sourcing from the domestic market completely.
'This move addresses the industry's long-standing concern regarding the unchecked inflow of low-cost apparel into the Indian retail market, which was adversely impacting domestic manufacturers, particularly micro, small and medium enterprises (MSMEs). The decision is a timely step towards preventing the dumping of foreign-made garments and strengthening India's self-reliance in apparel production,' said Santosh Katariya, president, Clothing Manufacturers Association of India (CMAI).
'We believe this policy must be complemented with continued support for capacity building and ease of doing business for Indian manufacturers. Enhancing the competitiveness of our MSMEs is critical to fully harness the opportunities created by such progressive trade measures,' Katariya added.
The step may impact buyers temporarily as their supply chain will be disrupted and have higher cost and lead time.
'They will need to re-align, and for products with less difference in cost and quality, they will shift to Indian suppliers,' Jain said.
'Most of our apparel is sourced from within the country. Our vendors at times import accessories for clothes from other markets. Even the little that we were sourcing from other markets will be stopped,' a company executive, on condition of anonymity, said.
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