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Exempting import duty on specialty man-made fabric to boost Indian exports

Ready-made garment exporters believe the government’s decision to do away with import duty on specialty man-made fabric used as inputs for exports can help them compete better with smaller countries such as Bangladesh and Vietnam. These countries have the dual advantage of low operating costs and preferential access to markets such as the European Union.

The Apparel Export Promotion Council (AEPC) will soon organise a nationwide drive to spread awareness about the new special advance authorisation scheme announced by the Centre last month for exporters to take advantage of it.

Just because of higher labour cost, absence of cluster forming and inability to attract women workforce to reduce labour costs, India has been losing to competitors like Bangladesh and Vietnam. Banking on trade agreements and low manufacturing overheads, these countries have started to pose a serious threat.

According to industry figures, India’s ready-made garments exports last year were worth $17.1 billion while Bangladesh’s garments exports in 2015-16 were valued at $28 billion. The government’s decision to allow duty-free import of specialty man-made fabric will help immensely in increasing Indian exporters’ competitive edge.

The additional benefit to exporters of high-end garments that use specialty fabric could roughly help offset 2-3 per cent import duties in the Western markets. Going by the fact that garment exporters from India pay on an average an import duty of five per cent in the EU when countries such as Bangladesh pay zero duty. In the US, the import duty on garments range from nine per cent to 20 per cent.

 
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