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)
