GST eases BD inroads into India’s RMG market

FE News Desk | Published: December 24, 2017 23:56:28

Bangladesh has recently entered India's readymade garments (RMG) market with the Goods and Services Tax (GST) facility.
Bangladesh's RMG export to India from July to November jumped by 56 per cent to $87.4 million over the corresponding period last year.
Import of knitted apparel surged 69 per cent to $30.1m. Import of woven apparel contributed the rest, $57.3m, from $38.1m in the same period last year.
In terms of volume and market size, overall import from Bangladesh isn't so much, said Business Standard.
The effective protectionist duty on import from Bangladesh during the pre-GST regime ended with the new tax in India from July 1.
"We have written to the government (India), seeking changes in the provisions," said Chairman, Confederation of Indian Textile Industry Sanjay Jain.
Garment makers in Bangladesh says the industry procure fabric from China with duty-free facility.
The two other basic advantages of Bangladesh over Indian manufacturers are cheaper electricity and cheaper labour.
Indian garment makers have to pay 20 per cent import duty for the same fabric from China. Power and personnel costs are also higher in India.
"We have taken a number of steps, including Rs 60 billion special package, technology upgradation funds, etc, to make cost of manufacturing garments in India competitive," said a senior government official.
With the current regulations, Bangladeshi garment manufacturers get 10-15 per cent of cost advantage over production in India.