India's textile companies start shifting base to Bangladesh to take advantage of low manufacturing costs

NEW DELHI: The textile firms have started to shift the production base to Bangladesh with the aim to take advantage of low manufacturing cost it offers.

The process has already started with the units in West Bengal is relocating to the neighbouring nation. Recently, the Indian government decided to permit duty-free import of 48-textile items from Bangladesh.

Mr A Sakthivel, the newly-elected Chairman of Apparel Export Promotion Council, has stated few of the textile firms, mainly from Kolkata, have already commenced establishing units in Bangladesh to take advantage of the duty concessions, cheap labour and also other low overhead costs.

Mr A Sakthivel, further elaborated, “Overall, it will be at least 20 per cent cheaper to import duty-free from Bangladesh and sell it in India. Besides, textile exports from that country also enjoy certain concessions in developed countries.”

Bangladesh comes with strong advantage with the minimum labour wage of mere Rs 1,700, and it stands at Rs 5,000 in India.
Reports suggest that the Indian firms have invested almost $600 million (nearly Rs 3,000 crore) during this fiscal year in Bangladesh and investments are likely to surge considerably with the textile firms displaying renewed interest.

Meanwhile, according to official data, India's imports from Bangladesh have climbed 85% to almost $300 million in the April-September period of 2011.

Raw jute imports from Bangladesh during the first six months of this fiscal surged more than five times to $54 million, and that of readymade garment rose almost three-fold to $22 million. The import of made-up of textiles also surged to $27 million after the tariff concessions and also duty-free import quotas to Bangladesh to strengthen the trade relations.