Connecting Regions of Asia.

‘Trade War Of Sorts’ With Bangladesh !


A trade war of sorts is brewing  between Bangladesh and India in the textile sector, as an indiscernible   consequence of the raging  corona  virus pandemonium  in  South Asia. The Indian Government is under acute pressure to recalibrate the familiar  terms of trade  with Bangladesh as per  well-defined SAFTA provisions,  as a temporary measure to save its own textile  industry. 

Bangladeshi sources  allege that in major land trading posts,   including  the largest land port at Benapole/Petrapole,  Indian authorities have  unilaterally slapped additional duties on exported  Bangladeshi textile  items, making them costlier.   Following local protests, this has led to a  demand from the  Bangladesh Textile Mills Association(BTMA)  pressing for a  similar retaliatory tariff on  imported  Indian textile products , by way  of an anti-dumping measure. Also, the BTMA wants  the entry of relatively cheaper Indian yarn  to Bangladesh to be stopped immediately.    

 In a letter to India’s  MInister for Textiles Ms Smriti Irani on May 22,  spokesmen of the Clothing Manufacturers’ Association of India (CMAI)  said the Indian industry currently  felt threatened by  duty free  textile imports  from Bangladesh and other sources.  The sector  could see  a major  drop in local  production  of textile goods  in the post covid-situation and the consequent lockdown ,   to the tune of 40%.  Many units have been shut down and more could follow suit, leading to a large scale job loss.

Despite the existing 12.5% countervailing and provincial duties imposed on Bangladeshi items  since 2011, says  CMAI President Mr Rakesh Biyani,   the neighbouring country still  accounts for 34% of garments imported by India. In fact during 2016-20 , there had occurred a whopping 196% increase in Bangladeshi textile imports to India.  Their attractive price range  appeals  strongly to the Indian aspirant middle classes, giving Dhaka a big advantage.    

In this situation, there is a danger to India’s domestic  industry from Bangladeshi imports, added to the challenge of back door entry of Chinese made fabrics , according to CMAI sources.  Only additional duties  imposed on certain items could help  India handle the present situation better. Based on existing volumes, through the collection of additional duties on select  Bangladeshi   and other items,  GOI(Government of India)  could expect to save between $100 to $150 million in the medium term.

The  GOI’s major problem as  explained  to the CMAI already, is that it is not easy to alter the rules of SAFTA trade as finalised in 2011.  There has to be a prolonged bilateral/group  discussion. Other issues may emerge unexpectedly.   

The Bangladesh industry has already alleged foul play on part of  India in this respect, calling Delhi’s move arbitrary .  Presumably as a compromise, the CMAI has proposed that its proposal for  slapping higher taxes for  Bangladeshi items be implemented  for a limited period of around 12 months or so, according to reports in the Indian and Bangladeshi media.    

BTMA sources  have  drawn the attention of Bangladeshi Finance Minister Mr A.H.M.Mustafa Kamal, Commerce minister  Tipu MUnshi and Textile/Jute Minister Mr Golam Dastgir Ghazi.  They have  also pressed for  a  financial incentive  of around 10% immediately.  An estimated $1.4 billion worth of unsold yarn has accumulated in Bangladesh  in recent months, as normal  trade activities have been badly impacted by the Corona virus pandemic.

Dhaka-based media reports said that between 2017-19, Indian imports from Bangladesh  amounted to $566 million  .

Bangladesh however imported  $7.7 billion worth of Indian textiles including  raw cotton yarns, cotton fabrics and other items, during the same period.

During 2018-19, Bangladesh earned $35 billion from its textile exports worldwide. ( Ashis Biswas , a veteran journalist with leading Indian media houses for nearly five decades, is now News Editor at Easternlink)

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