RMG makes $ 50m inroad into Indian market
Wednesday, 29 December 2010
Author / Source : Special Correspondent
Dhaka, Dec 28: Bangladeshi garments manufacturers are now sniffing at opportunities in the $ 35 billion apparel market next door, in India.
After toppling India as the favoured garments sourcing destination for US and European buyers, Bangladeshi RMG players have made a small, but significant inroad into the highly regulated, but lucrative apparel market in the neighbouring country, overcoming tariff barriers by sheer price competitiveness and attention to quality. Six Bangladeshi exporters have sent ready-made garments worth USD 50 million to India, in the last couple of months, after paying an average 15 per cent duty.
Our price competitiveness, along with proven quality, helped gain a toehold in the USD 35 billion Indian market, said Abu Bakar Siddique, managing director of Star Link Garment Ltd.
The trend emerged after the Indian government allowed Bangladesh to export 8 million pieces of apparel under a Tariff Rate Quota (TRQ) duty-free programme since 2008, he added.
Besides Star Link, Radiant Group, Envoy Group, Kashem Apprel and Zara Fashionwear have also exported garments to India. Apart from the union government, different state governments in India also impose between 15 to 25 per cent tax on Bangladeshi products, which hinder the growth of our exports, said SM Shahed, director of Radiant group.
Indian importers have to pay 8 per cent countervailing duty, 4 per cent special additional duty and other duties for Bangladeshi apparel, Shahed said. He added that if these para-tariffs are lifted, Bangladeshi products, especially denim trousers, men's shirts and high-value knitwear products, can grab a big portion of the market in India.
India has put 158 apparel products on its sensitive list under the South Asian Free Trade Agreement (SAFTA), which hinders Bangladesh apparel exports to India.
When asked, Bangladesh Readymade Garments Manufacturers and Exporters Association (BGMEA) president Abdus Salam Murshedy said his Envoy group has exported 2 lakh pieces of garments to India this year.
He said that the Bangladesh government should negotiate with its Indian counterpart to seek relaxation of the apparel quota system and reduction in taxes, to decrease the trade gap.
Bangladeshi products in certain apparel categories, where India has lesser competitiveness, could easily gain popularity due to their price and quality. If India reduces restrictions and tariffs for these products, Bangladesh will get a chance to reduce the huge bilateral trade gap, Murshedy added.
Kashem Apparel owner Md Abul Kashem said he got a big order for knitwear products from India's Andhra Pradesh, where importers are forking out 20 per cent tax on Bangladeshi imports.
It may be noted that Bangladeshi exporters were able fulfil the TRQ in 2009 and 2010, backed by strong demand. TRQ is a trade policy tool used by a country to protect domestic producers from competitive imports. The quota allows a limited quantity of a specified merchandise to be imported into a country.
Indias specific duties on garments appear to have prevented any substantial penetration of its domestic market by garments producers based in developing countries like Bangladesh, Moazzem Hossain, a senior research fellow of the CPD said.
India has roughly 11 million garment retailing outlets, with the size of the market pegged at INR 20,000 crore, or $ 35 billion.
Bangladesh's exports to India was $ 276 million in fiscal year 2008-09 ended in June 2009, against USD 358 million a year ago in FY 2007-08, $ 289 million in FY 2006-07, $ 242.2 million in FY 2005-06 and $143.7 million in FY 2004-05.
Wednesday, 29 December 2010
Author / Source : Special Correspondent
Dhaka, Dec 28: Bangladeshi garments manufacturers are now sniffing at opportunities in the $ 35 billion apparel market next door, in India.
After toppling India as the favoured garments sourcing destination for US and European buyers, Bangladeshi RMG players have made a small, but significant inroad into the highly regulated, but lucrative apparel market in the neighbouring country, overcoming tariff barriers by sheer price competitiveness and attention to quality. Six Bangladeshi exporters have sent ready-made garments worth USD 50 million to India, in the last couple of months, after paying an average 15 per cent duty.
Our price competitiveness, along with proven quality, helped gain a toehold in the USD 35 billion Indian market, said Abu Bakar Siddique, managing director of Star Link Garment Ltd.
The trend emerged after the Indian government allowed Bangladesh to export 8 million pieces of apparel under a Tariff Rate Quota (TRQ) duty-free programme since 2008, he added.
Besides Star Link, Radiant Group, Envoy Group, Kashem Apprel and Zara Fashionwear have also exported garments to India. Apart from the union government, different state governments in India also impose between 15 to 25 per cent tax on Bangladeshi products, which hinder the growth of our exports, said SM Shahed, director of Radiant group.
Indian importers have to pay 8 per cent countervailing duty, 4 per cent special additional duty and other duties for Bangladeshi apparel, Shahed said. He added that if these para-tariffs are lifted, Bangladeshi products, especially denim trousers, men's shirts and high-value knitwear products, can grab a big portion of the market in India.
India has put 158 apparel products on its sensitive list under the South Asian Free Trade Agreement (SAFTA), which hinders Bangladesh apparel exports to India.
When asked, Bangladesh Readymade Garments Manufacturers and Exporters Association (BGMEA) president Abdus Salam Murshedy said his Envoy group has exported 2 lakh pieces of garments to India this year.
He said that the Bangladesh government should negotiate with its Indian counterpart to seek relaxation of the apparel quota system and reduction in taxes, to decrease the trade gap.
Bangladeshi products in certain apparel categories, where India has lesser competitiveness, could easily gain popularity due to their price and quality. If India reduces restrictions and tariffs for these products, Bangladesh will get a chance to reduce the huge bilateral trade gap, Murshedy added.
Kashem Apparel owner Md Abul Kashem said he got a big order for knitwear products from India's Andhra Pradesh, where importers are forking out 20 per cent tax on Bangladeshi imports.
It may be noted that Bangladeshi exporters were able fulfil the TRQ in 2009 and 2010, backed by strong demand. TRQ is a trade policy tool used by a country to protect domestic producers from competitive imports. The quota allows a limited quantity of a specified merchandise to be imported into a country.
Indias specific duties on garments appear to have prevented any substantial penetration of its domestic market by garments producers based in developing countries like Bangladesh, Moazzem Hossain, a senior research fellow of the CPD said.
India has roughly 11 million garment retailing outlets, with the size of the market pegged at INR 20,000 crore, or $ 35 billion.
Bangladesh's exports to India was $ 276 million in fiscal year 2008-09 ended in June 2009, against USD 358 million a year ago in FY 2007-08, $ 289 million in FY 2006-07, $ 242.2 million in FY 2005-06 and $143.7 million in FY 2004-05.
