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New Delhi: Many Indian
garment makers have shifted base or opened new units in
neighbouring Bangladesh to take advantage of low labour cost and
duty concessions on exports to US and European markets.
"Labour cost in Bangladesh is almost one-third of that in India.
Average monthly labour cost in India is over Rs.7,000 per person,
while it is just around Rs.2,500 in Bangladesh," said D.K. Nair,
secretary general of the Confederation of Indian Textile Industry.
"More than 35 Indian textile firms have opened factories in
Bangladesh so far, most of them in the recent months," Nair, who
oversees the apex industry body for the $55-billion Indian textile
industry, told IANS.
Some of the leading Indian garment exporters like Shahi Exports,
House of Pearl Fashions, Jay Jay Mills and Ambattur Clothing are
using Bangladesh as an important destination in their journey to
the western markets.
According to Bangladesh's Board of Investment, Indian textile
firms have invested nearly $80 million in 35 factories.
Bangladesh, which is categorised as a least developed country (LDC),
enjoys duty-free access to European markets, while Indian firms
have to pay 9.6 percent duty.
"If you take duty concessions, labour and other costs into
account, garments produced in Bangladesh is almost 20 percent
cheaper," said Nair, alluding that it thus becomes difficult for
Indian firms to compete globally.
This apart, the aggressive monetary tightening policies of the
Reserve Bank of India (RBI) in the recent months has also made
cost of capital expensive and further added to the woes of Indian
textile makers.
O.P. Lohia, chairman and managing director of Indo-Rama Synthetics
, a leading polyester fibre maker, said Indian companies were
attracted to Bangladesh despite relatively poor infrastructure and
uncertain political situation.
"Textile companies are facing cut-throat competition. Profit
margin is very low and 15-20 percent cost difference is a big
thing. So people are getting attracted to Bangladesh," Lohia told
IANS.
He said even China is not able to stand the competition and is
losing its share of exports in US and European markets to
Bangladesh.
"Textiles is perhaps the most labour intensive industry. In
Bangladesh labour is not only cheap but also easily available when
you compare it with India and China," Lohia said.
Besides labour cost and duty advantage, raw materials and real
estate costs are also cheaper in Bangladesh.
In a bid to help the domestic industry, Indian Commerce Minister
Anand Sharma said the government has adopted a multi-pronged
strategy to address the concerns of garment makers and exporters.
"I am aware that there is a serious concern on exports to the US
and European countries," Sharma said, adding that the government
will provide incentives to exporters in the form of interest
subsidy and duty benefits.
(Gyanendra
Kumar Keshri can be contacted at gyanendra.k@ians.in)
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