Bangladesh likely to beat India in garment exports

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FE Report
Bangladesh is set to beat India in garment exports in the wake of an appreciating rupee, according to an Indian newspaper report.
Last year, the country exported garments worth US$8.0 billion, whereas Bangladesh notched up around US$7.8 billion. With low manufacturing costs coupled with several incentives in the overseas market, Bangladesh apparel exports have continuously been rising at a rate of 20-25 per cent.
Industry experts believe if the rupee continues to appreciate against dollar, the country's garments exports will be pushed into negative territory. "Bangladesh will easily surpass India in garment exports by the end of this year," the newspaper quoted President of Clothing Manufacturers Association of India (CMAI) Rahul Mehta as saying.
Bangladesh exports almost 90 per cent of apparel production. The country does not have its back up of raw material for garments on its own. Instead, it is dependent on imports mainly from China. On the other hand, India does not depend on imports for raw material owing to its sufficient back up.
"Bangladesh is strong competitor on pricing with India. Moreover, the cost of production there is low, and its currency is static against dollar unlike ours," said Premal Udani, former president, CMAI.
He added that in European markets and in Canada, Bangladesh was exempted from any import duty. However, Indian exporters have to pay 11 per cent in EU countries and 18 per cent in Canada.
As far as export to India is concerned, there is a concession of 50 per cent in the import duty to Bangladesh, said Udani. Industry players feel that if rupee climbs up further, there will be negative growth in apparel exports and the country may lose its principal markets.
After the quota regime was uplifted in 2005, India's apparel exports grew by 20 per cent that year. However, the next year, the growth was down to 8 per cent.