In 2006 under SAFTA, India was allowed duty free import of readymade garments from Bangladesh and this facility was limited to eight million pieces. However, in 2010, this quantitative restriction was lifted. According to CITI India, India's garment imports from Bangladesh increased from $106.72 million during April-December 2016 to $124.14 million in the corresponding period of 2017.
Confederation of Indian Textile Industry (CITI India) chairman Sanjay K Jain says that duty-free facility given to Bangladesh on grounds of it being a Least Developed Countries (LDC) was actually benefiting China's textile exports. He further add India too has accepted sourcing restrictions imposed by Japan that hurt its apparel exports to Japan under India-Japan CEPA, and in the Goods and Service Tax (GST) regime, the industry has been under severe stress with increasing imports of garments from Bangladesh and other countries.
Indian domestic garment manufacturers have to pay a 20 per cent import duty if they use the same Chinese fabric. India has now extended this duty-free quota-free facility to all 49 LDCs on a non-reciprocal basis and again without any sourcing restrictions. So, it is expected that in future, we may have more Bangladesh-type situation, says Jain.
Jain added in the seminar on "Recent Trends on Eco-Friendly Textiles and Sustainable Fashion organised by the J D Birla Institute have demanded tweaking of SAFTA rules of origin to make the use of yarn and fabrics of Indian origin mandatory for allowing duty-free quota-free market. So that China cannot take any undue advantage of a facility that is meant for LDCs.
Meanwhile the Indian textiles industry is seeking "tweaking of South Asian Free Trade Area (SAFTA) rules of origin" to make use of yarn and fabrics of Indian origin mandatory for exporting apparel to India, amid a fast increasing import of garments made of Chinese fabrics from Bangladesh.