Indian manufacturers hike Bangladeshi investment

Wednesday, 08 February 2012

To beat the high manufacturing and labor costs in the country, many Indian garment manufacturers are moving their manufacturing facilities to Bangladesh to take advantage of the lower production and labor costs in this neighboring country. It is estimated that Indian textile and garment companies have already invested Rs 30 billion in Bangladesh during the current fiscal 2011-12. And this investment is likely to increase significantly. Garment imports from Bangladesh to India increased around three-times to Rs 108 crores during the first six months of current fiscal.

Last year, after the Indian Government permitted duty-free imports of 48 textile and garment items from Bangladesh, Indian manufacturers had expressed their anger since these low cost merchandise started eating into their profits. A major advantage to Indian companies investing or moving production base in Bangladesh is with respect to labour cost, as minimum wages there is just Rs 1,700 compared to the minimum wage of Rs 5,000 in India.

After A Sakthivel took over as President at Apparel Export Promotion Council, he had told the media that to protect India’s interests, government should remove the 10 per cent excise duty on branded garments and AEPC has decided to put this on their list of expectation from the forthcoming budget. AEPC has also decided to appeal to the government to force Bangladesh to use only Indian origin yarn or fabric to produce the garments which come to India.

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