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 lobby to push the government to restrain the flow.
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 million in 2016-17 to $1.04 billion during April-November period of 2018-19. During April-November this fiscal, total imports from Bangladesh stood at $781 million (annualised $1.17 billion). 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.
What has particularly drawn the attention of the Indian textile industry is the absence of the minimum value addition criteria in SAFTA. Confederation of Indian Textile Industry (CITI) is apprehensive that this loophole might be used for diversion of Chinese man-made fibre-based garments through Bangladesh However, as amending SAFTA is not possible now, India might consider ‘imposing safeguard duty’ as per budget provisions.