India slaps 16 percent duty on RMG imports from Bangladesh

The Indian government has slapped nearly 16 percent countervailing duty (CVD) on import of readymade garments products from Bangladesh. The step comes at a time when RMG exporters in Bangladesh were looking at their neighbouring

country as the next biggest export destination after the US and the EU following a withdrawal of import duty on 48 garment products last year.

Despite several impediments like the devaluation of Indian rupee against the US dollar and the Lilliput debt issue, RMG exports to India rose by rise-nearly 35 percent - in the first seven months of the current fiscal year, reveals the research cell of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). Therefore, the Indian government’s move has come as a shocker for the Bangladesh RMG industry.

According to trade bodies and apparel exporters from Bangladesh, the Indian government’s move would severely affect Bangladeshi exports to India. It may be recalled that in the Union Budget for 2013-14 the FM imposed a CVD of 12.36 percent and an additional cess of 3 percent on garments imported from Bangladesh. In fact, this was one of the major demands of the Indian knitwear and ready-made garment makers, who felt the duty-free import of garments from Bangladesh was hurting the Indian industry badly.

As for the Bangladesh RMG industry, they see it as a double blow to exporters because if Bangladesh imports cotton from India and then exports RMG to the country, the products would surely lose competitiveness due to higher duties. On the other hand, products like suits, jackets, trousers, blazers, undergarments, pyjamas, bathrobes, T-shirts, singlets and vests, jerseys, pullovers, cardigans, waist-coats among others from Bangladesh have a great demand in India.

Bangladeshi exporters are now demanding a level playing field with India and have appealed to Bangladesh government to talk to their Indian counterparts to bridge the trade gap and to expand export opportunities. As per former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Haque exports to India were nowhere near the expectation due to complex rules and regulations in different states of India. The trade gap between the two countries was more than five billion dollars (Rs 27,170 crores) in fiscal year 2012 which was in India's favour, says Export Promotion Bureau (EPB).