Imports of readymade garments from Bangladesh have increased by 53 per cent
Cotton garments such as trousers, shorts and shirts and cotton T-shirts are among the top four imported items. And this surge is catching up with synthetic textile products, too, at a much faster rate.
When all these products are commonly manufactured in clusters such as Tirupur, Chennai, Surat and Ichalkaranji, Indian manufacturers seem to be losing out to Bangladesh.
Before GST, Indian importers had to pay a countervailing duty of about five percent to seven percent, which drove up the costs of these garments. With GST having subsumed this duty, apparel from Bangladesh has become cheaper for Indian importers by 5 per cent to 7 per cent. Also Bangladesh has the advantage of having lower minimum wages than those in India. This reduces the cost of production and makes clothing cheaper. Another factor which makes Bangladesh competitive is the fact that it enjoys duty free imports of fabrics and garments from China. The availability of cheaper fabric, too, brings down manufacturing costs. Lastly, India has a lot of small production units and factories. So if retailers want to procure 100,000 pieces, they’ll have to source them from several Indian garment producers, whereas they can procure the same easily in Bangladesh by placing the order to one or two firms.