CITI Seeks Level Playing Field For Indian Garmenters In Post-GST Regime

Trade & Policy

CITI Seeks Level Playing Field For Indian Garmenters In Post-GST Regime

In a recently made statement to the government, the apex textile body of India, Confederation of Indian Textile Industry (CITI) demanded that protectionist measures be adopted in order to preempt China from routing cheap fabrics through Sri Lanka and Bangladesh. The problem is accentuated as India has free trade agreements with these countries.

“The FTAs will imply that Indian garment manufacturers face stiff competition from these countries. Needless to say, garments imported from such countries come at a lower cost. The cost factor advantage these countries hold over India is due to lower productions costs as compared to India,” the CITI opined in its statement.

The Export Bureau of Bangladesh only recently released information about India’s garment imports from Bangladesh. According to the data supplied, the import figures have touched the USD 87.4 million mark for the period spanning July to November this year. Compared to the previous year’s import figures this indicates a rise of 56% covering the same period. The import tally for the same period in the previous year stood at USD 55.92 million.

According to CITI Chairman Sanjay Kumar Jain’s press statement, “There is an urgent need to impose safeguard measures such as Rules of Origin, Yarn Forward and Fabric Forward Rules on the countries like Bangladesh and Sri Lanka that have free trade agreements (FTAs) with India to prevent cheaper fabrics produced from countries like China routed through these countries.”

“During July-November period, India’s knitted apparel imports from Bangladesh has surged by 69% whereas woven apparel imports increased by 51%, compared to the same period a year ago,” he added.

The chairman also drew attention to the fact that garment imports from Bangladesh are exempt from custom duty.

He made a comparison between the pre-GST and post-GST regime changes on the price of imports from Bangladesh to drive home his point. He pointed out that in the pre-GST days, every piece of garment was incurring a cost of INR 116 in the form of CVD and education cess. Post implementation of GST, there is a dramatic change as garment imports from Bangladesh do not incur any cost, he explained.

“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 is putting Indian garment industry at a major disadvantage and it is feared that this figure will go up further in the coming days as more Indian Brands shift sourcing from India to low cost duty-free countries like Bangladesh and Sri Lanka,” he concluded in his press statement.