Tirupur: Knitwear exporters in the Tirupur cluster are positive that Bangladesh will lose duty-free access given by the European Union (EU) on readymade garment (RMG) exports in 2020 as the neighbouring country is expected to lose the ‘least developed nation’ status by then. 

However, the exporters say they can reap the benefits of Bangladesh’s loss only if the central government provides adequate support to the industry. According to data from the United Nations Conference on Trade and Development, Bangladesh’s per capita income stood at $1,355 in 2016, a 39% increase compared to 2013 ($974). 

At the current rate, by 2020, its per capita income is predicted to overtake India’s, which stood at $1,706 in 2016. As per the World Trade Organisation, if the country’s per capita income has remained more than $1,000 continuously for three years, it could be classified as a ‘developing nation’. 

With a fast-growing economy, Bangladesh may become one of the developing nations. So, it is expected to be stripped of duty-free access given by the EU. With a $28 billion RMG sector, Bangladesh’s 15% share in the international RMG market is the second largest, next only to China. 

Garments sold from India attract about 10% import duties while Bangladesh enjoys duty free status in many developed markets, including the EU. Since the duty-free access given by the EU was one of main advantages enjoyed by exporters in Bangladesh, Tirupur knitwear exporters have been repeatedly saying that there was no level playing field. They have been urging the government to provide adequate sops to sustain the industry.

“If the duty-free access advantage is denied to Bangladesh, it will have to compete with countries like India. So, India will not have a disadvantage in pricing garments,” M Ramachandran, director of Excellent Export Training Center told TOI. “International buyers may have choices between the two countries and place orders based on who provides quality products at cheaper rates,” he said.

Tirupur Exporters’ Association president Raja M Shanmugham said, “Even though Bangladesh is predicted to be stripped of the duty-free access by the EU, Indian exporters may not benefit. For instance, when the RMG international market share of China went down from 39% to 35%, it was predicted that it would help India to improve its share by 3.5%. But, in reality, Chinese RMG firms’ stake in the market has grown because they started to manufacture goods in labour-rich countries like Vietnam and Cambodia.”

“The Tirupur cluster could achieve the growth over the years, in an organic manner, mainly because of efforts of the industrialists themselves. The government’s support was little. Unless the government provides holistic support, as given in other competing countries, it will not be easy to compete with Bangladesh,” he said.

Source : Times of India

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