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India's decision to extend duty-free access to 46 Bangladeshi products can be a "game-changer" in Indo-Bangla trade ties, with local manufacturers saying the move can boost apparel export to India by $5.0 billion in five years.
Apparel makers said India's unilateral tariff removal was "the best thing to have happened to Bangladeshi exports" as the country enjoys competitive advantages in majority of the 46 garment items that are expected to be positively impacted by the Indian decision.
They, however, cautioned that a backlash from the powerful Indian textile lobby could be round the corner, as textile makers are major employers in India and they can force New Delhi to slap trade-restrictive safeguard measures on the Bangladeshi garments.
CITI, the Indian textile association, has already petitioned the government, warning the move could impact the fate of 35 million Indian textile workers and a large number of small and medium garment factories.
Shafiul Islam Mohiuddin, president of Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said the government should now "stay vigilant" against any move to set the decision about the duty-free access at naught.
"This can be game-changer in Bangladesh-India trade-ties. Previously, India would give duty-free access to those items which we don't produce or where we don't enjoy any competitive advantages," he told the FE on Wednesday.
"But these 46 items are all garment products. We are highly competitive in these items. I am confident we can even raise our exports to $5.0 billion to India if New Delhi sticks to its duty-free decision," he said.
It means garments alone can neutralise Bangladesh's $4.0 billion trade deficit with India. In fiscal year (FY) 2010-11, the country imported Indian merchandise worth $4.5 billion and exported around half a billion dollars.
Presently, Bangladesh can export 10 million annually pieces of garments, free of duty to India. The amount is the annual production of a mid-sized local garment factory.
According to the BGMEA, Bangladesh apparel shipment to India stood at $35 million in FY 2010-11, out of the total overseas sale of $19 billion. The amount is 0.0013 per cent of India's $28 billion clothing market.
"Our products have a large demand in India but we could not export in volume due to the quota system," said Siddiqur Rahman, second vice president of BGMEA.
"India could be the third largest destination of our garments after the European Union and the United States following last Tuesday's decision. Our garment manufacturers have been making these products for years," he said.
Selim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said knitted items such as t-shirt, sweater, pullover account for 25 of the 46 items, while woven products constitute the rest.
"There are many clothing products we can not export to the EU and the US. But they have good demand in India. If we can enter the Indian market with a population of 1.2 billion, the size of our sector will be doubled," he added.
"It opens a big door," he said adding the Bangladeshi small and medium garment makers will be the main beneficiaries of the Indian decision.
According to The Hindu Business Line, an Indian financial daily, the apparel items that have been allowed duty-free access include pants, shirts, blouses, skirts, kidswear, cotton nightwear, jeans, swimwear and tracksuits.
There will be "severe adverse impact" on the garment clusters in Tirupur, Ludhiana and West Bengal, CITI claimed, adding that all 46 products cover most of Bangladesh's total garment production in terms of quantity.
BGMEA president Mohiuddin warned that once Bangladeshi exports started making headway in the Indian market, New Delhi could opt for Turkish-style safeguard taxes on Dhaka's clothing items."
In Turkey, we raised our exports to $650 million in just two years. But that created panic among the Turkish garment makers, who this year forced their government to slap 27 per cent anti-dumping taxes on our products," he said.
"The government should be prepared for such an upshot and stay vigilant against any move by any quarters to jeopardise the duty-free access," he said.
According to the World Trade Organisation (WTO), India has slapped the highest number of trade-restrictive safeguard taxes on foreign goods, which included Bangladeshi batteries and jute itmes for sometimes.
New Delhi lifted the anti-dumping duty on Rahimafrooz's batteries only after Bangladesh took up the case to the dispute resolution committee of the WTO.
Apparel makers said India's unilateral tariff removal was "the best thing to have happened to Bangladeshi exports" as the country enjoys competitive advantages in majority of the 46 garment items that are expected to be positively impacted by the Indian decision.
They, however, cautioned that a backlash from the powerful Indian textile lobby could be round the corner, as textile makers are major employers in India and they can force New Delhi to slap trade-restrictive safeguard measures on the Bangladeshi garments.
CITI, the Indian textile association, has already petitioned the government, warning the move could impact the fate of 35 million Indian textile workers and a large number of small and medium garment factories.
Shafiul Islam Mohiuddin, president of Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said the government should now "stay vigilant" against any move to set the decision about the duty-free access at naught.
"This can be game-changer in Bangladesh-India trade-ties. Previously, India would give duty-free access to those items which we don't produce or where we don't enjoy any competitive advantages," he told the FE on Wednesday.
"But these 46 items are all garment products. We are highly competitive in these items. I am confident we can even raise our exports to $5.0 billion to India if New Delhi sticks to its duty-free decision," he said.
It means garments alone can neutralise Bangladesh's $4.0 billion trade deficit with India. In fiscal year (FY) 2010-11, the country imported Indian merchandise worth $4.5 billion and exported around half a billion dollars.
Presently, Bangladesh can export 10 million annually pieces of garments, free of duty to India. The amount is the annual production of a mid-sized local garment factory.
According to the BGMEA, Bangladesh apparel shipment to India stood at $35 million in FY 2010-11, out of the total overseas sale of $19 billion. The amount is 0.0013 per cent of India's $28 billion clothing market.
"Our products have a large demand in India but we could not export in volume due to the quota system," said Siddiqur Rahman, second vice president of BGMEA.
"India could be the third largest destination of our garments after the European Union and the United States following last Tuesday's decision. Our garment manufacturers have been making these products for years," he said.
Selim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said knitted items such as t-shirt, sweater, pullover account for 25 of the 46 items, while woven products constitute the rest.
"There are many clothing products we can not export to the EU and the US. But they have good demand in India. If we can enter the Indian market with a population of 1.2 billion, the size of our sector will be doubled," he added.
"It opens a big door," he said adding the Bangladeshi small and medium garment makers will be the main beneficiaries of the Indian decision.
According to The Hindu Business Line, an Indian financial daily, the apparel items that have been allowed duty-free access include pants, shirts, blouses, skirts, kidswear, cotton nightwear, jeans, swimwear and tracksuits.
There will be "severe adverse impact" on the garment clusters in Tirupur, Ludhiana and West Bengal, CITI claimed, adding that all 46 products cover most of Bangladesh's total garment production in terms of quantity.
BGMEA president Mohiuddin warned that once Bangladeshi exports started making headway in the Indian market, New Delhi could opt for Turkish-style safeguard taxes on Dhaka's clothing items."
In Turkey, we raised our exports to $650 million in just two years. But that created panic among the Turkish garment makers, who this year forced their government to slap 27 per cent anti-dumping taxes on our products," he said.
"The government should be prepared for such an upshot and stay vigilant against any move by any quarters to jeopardise the duty-free access," he said.
According to the World Trade Organisation (WTO), India has slapped the highest number of trade-restrictive safeguard taxes on foreign goods, which included Bangladeshi batteries and jute itmes for sometimes.
New Delhi lifted the anti-dumping duty on Rahimafrooz's batteries only after Bangladesh took up the case to the dispute resolution committee of the WTO.
A bit optimistic maybe?
