Bangladesh has gained access to Indian market under the duty free agreement and this has been a cause for worry for Indian apparel manufacturers, who produce similar merchandise. But Indian apparel manufacturers and retailers have decided to find a way out to deal with the situation. Now they have started exploring opportunities to either set up a manufacturing base or source garments from Bangladesh.
Retail giants like Pantaloon, Globus and Turtle have already begun their hunt for sourcing apparel from Bangladesh. In fact, Turtle is also looking at setting up factories there. Retailers feel that by sourcing apparel requirements from Bangladesh, they would able to cut cost on their merchandise in turn boosting demand and attracting consumers. Shoppers Stop, another retail biggie, has begun importing finished garments for its private labels from China and Sri Lanka and now plans to look at Bangladesh as well to reduce operational costs.
The ready-made apparel market saw a 10-15 per cent loss in volume in the last six months when cotton prices increased and 10 per cent excise duty was imposed on branded apparel. India’s leading apparel retailer Pantaloon, which is already reeling under a huge debt pressure and rising inventory, has started sourcing garments from Bangladesh to reduce product prices. With such an initiative, it believes that prices could be brought down by 10-15 per cent.
Over the last few years, apparel makers in India have been steadily losing share in this labour-intensive textile business to Bangladesh, where companies pay workers Rs 2,000 a month compared with an average wage of Rs 7,000 a month in India. In addition to lower labour costs, Bangladesh doesn’t have to bear export taxes in at least 37 countries, including EU nations, Canada and Australia, a facility given to the world’s poorest countries, while garment sales from India attract import duties of 8-10 per cent in these countries. Moreover, the duty-free export limit for Bangladesh readymade garments into India has been raised to 10 million pieces.