Indian Government is exploring avenue to contain the imports of textile and clothing from Bangladesh. The persistent rise in exports of Bangladeshi ready-made garment (RMG) products to India provoked the Indian textile lobbies to push the government restrain the flow. The latest Indian budget, placed in the parliament recently, decided to review the provisions of ‘rules of origin’ under the Customs Act to ‘check misuse of FTA route and strengthening provisions relating to safeguard duty,’ according to a report. It “may check rising flow of textile (readymade garments) imports from Bangladesh,” the report observed. It said that India offers Bangladesh duty-free, quota-free market access under SAARC Free Trade Area (FTA) or SAFTA in 2011.
“Textiles played a crucial role in pushing Bangladeshi exports to India from $672 mn in 2016-17 to $1.04 bn during April-November period of 2018-19,” said the report. “During April-November this fiscal, total import from Bangladesh stood at $781 mn (annualised $1.17 bn),” it added. Bangladesh is the world’s second-largest exporter of RMG and its “exports to India got a significant boost following the implementation of GST – which subsumed 12 per cent countervailing duty (CVD) – in July 2017.” “Countries like Sri Lanka, Vietnam also enjoyed the benefits of the introduction of GST. But, Bangladesh made the most of it,” according to a report.
“What particularly drew the attention of the Indian textile industry was the absence of the minimum value addition criteria in SAFTA,” the report pointed out. “Confederation of Indian Textile Industry (CITI) was apprehensive that the loophole might be used for diversion of Chinese man-made fibre-based garments through Bangladesh,” it continued. As amending of SAFTA is not possible now, the report, quoting Sanjay Jain, Managing Director of TT Ltd, said that India might consider ‘imposing safeguard duty’ as per budget provisions.