Latest stats released by Export Promotion Bureau of Bangladesh reveal textile imports grew 19.7 per cent year-on-year to around $1.4 billion between April and December 2017 while exports went up by a narrow 2 per cent y-o-y to $26.1 billion for the period. India’s imports of garments from Bangladesh increased 66 per cent y-o-y to $111.3 million during July-December 2017. While knitted apparel imports from Bangladesh rose sharply by 77 per cent y-o-y to $36.5 million between July and December 2017, woven apparel imports grew by 62 per cent y-o-y to $74.8 million.

Sanjay K Jain, Chairman, Confederation of Indian Textile Industry (CITI) explains, “It (imports) is negatively affecting the domestic yarn, fabric and garment manufacturers. There is a greater need to impose safeguard measures such as rules of origin, yarn forward and fabric forward rules on countries like Bangladesh and Sri Lanka that have FTAs with India to prevent cheaper fabrics produced from countries like China routed through these countries.”

Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty free and convert them into garments and sell to India duty free. This has raised many issues from the garment industry. CITIs Chairman says, India can increase its exports of cotton yarn and fabrics provided the sector is restored with export incentives. India’s share of cotton yarn in world trade is 26 per cent and it is declining steeply as the incentives given to the cotton yarn sector were withdrawn in 2014 and Merchandise Exports from India Scheme (MEIS) which was extended to the entire value chain was not extended to cotton yarn. Moreover, there are various state levies up to the tune of 8 per cent on cotton yarn which are not refunded at any stage. Similarly, fabric sector is not getting refund of state levies of around 6 per cent. By including cotton yarn under MEIS and providing refund of state levies (RoSL) for fabrics, Indian can retain its competitiveness in the global market.