High costs, stiff labour laws drive textile mills to B’desh

Jan 20 2013, 02:20 IST
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SummaryThe fabric comes from China, the technology comes from India, and the workers from Bangladesh.

a senior textile ministry official.

“Labour cost is at least 30% cheaper in Bangladesh than India and labour laws very flexible. Duty-free access is a big advantage,” says DK Nair, secretary general, Confederation of Indian Textile Industry.

Bangladesh also offers incentives to run garment units, says Rahul Mehta, president, Clothing Manufacturers’ Association of India. “You can import fabric from China at zero duty if you are based in Bangladesh,” he adds. The government support there is so much that imported capital equipment are exempt from tax, while other industries are required to pay high duties for the machinery they require, says another industry executive.

“Another crucial reason is that garments exports to Europe from Bangladesh is duty-free. Many Indian mills that have not yet set up base in Bangladesh still have their agents there to source supplies,” says Premal Udani, chairman of the Apparel Export Promotion Council. This means Bangladesh is snatching away buyers from India, as traditionally Europe accounts for around 30% of India’s total textile exports.

“The result is Bangladesh, which was trailing India in apparel exports as late as 2005-06, has not just overtaken us, but its exports of around $25 billion are 70% higher than ours,” says another executive.

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