Low costs luring Indian textile makers to Bangladesh
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, said.
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 per cent duty.
"If you take duty concessions, labour and other costs into account, garments produced in Bangladesh is almost 20 per cent 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 per cent 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.
http://m.economictimes.com/low-costs-luring-indian-textile-makers-to-bangladesh/PDAET/articleshow/10376677.cms
http://www.india-briefing.com/news/incentives-indias-textiles-industry-5077.html/
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, said.
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 per cent duty.
"If you take duty concessions, labour and other costs into account, garments produced in Bangladesh is almost 20 per cent 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 per cent 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.
http://m.economictimes.com/low-costs-luring-indian-textile-makers-to-bangladesh/PDAET/articleshow/10376677.cms
Incentives for India’s Textiles Industry
India’s Foreign Trade Policy (2009-14) announced by the Union Minister of Textiles, provides various incentives for the country’s textiles sector. The sector has been stumbling lately under financial uncertainty at the global level as well as pulls and pressures at the domestic level.
“A multi-pronged strategy has been adopted by providing a stable policy regime, adopting a conscious market diversification plan and providing additional support to sectors hit badly by the global recession. The Ministry also encouraged technological up-gradation of export sectors, and undertook a simplification of procedures to reduce transaction costs and decided to consolidate India’s traditionally strong sectors of the economy while focusing on sunrise sectors as well,” according to the Ministry of Textiles (MoT).
The Ministry has decided to widen the Market-Linked Focus Product Scheme (MLFPS) for exports under Chapter 61 and 62 and a 2 percent duty credit will be available to them for exports made to the United States and European Union from April 1, 2011 to March 31, 2012.
Financial support of 2 percent on Rupee Export Credit has been extended until March 31, 2012 for handlooms, handicrafts, carpets and all small and medium enterprises. In order to expand the coverage of products under the Focus Product Scheme (FPS), the Minister has decided to include 130 new items covering 10 product sectors, specifically including chemicals, pharmaceuticals, textiles, handicrafts, engineering and the electronics sector which will get a 2 percent duty credit under the scheme. Chemicals such as soda ash, textile items like polyester yarn, woven cotton fabric denim, unbleached or bleached cotton fabrics, as well as knitted and dyed cotton fabrics are covered under the plan.
Relief announced by the Ministry
Support to the apparel sector
The apparel sector is growing these days and has high potential to achieve increased levels of exports and generate employment opportunities.
Support to the apparel sector
The apparel sector is growing these days and has high potential to achieve increased levels of exports and generate employment opportunities.
Chapter 61 and Chapter 62 items were approved duty credit under MLFPS for export to the United States until September 30, 2010 and for exports to the European Union up until March 31, 2011. Though, at present, the readymade garments are not covered under the FPS/MLFPS, it has been decided to extend MLFPS for exports to the United States and the European Union under Chapter 61 and Chapter 62.
The proposal would cover everything that was covered under Chapter 61 and Chapter 62. The duty credit would be accessible to exports made during January 4, 2011 to March 31, 2012 at 2 percent of the FOB value of exports.
Focus Product Scheme
The catalog of items under FPS has been prolonged to comprise 130 additional items. These items are largely in the chemical/pharmaceuticals, textiles, handicrafts, engineering and electronics sectors.
The catalog of items under FPS has been prolonged to comprise 130 additional items. These items are largely in the chemical/pharmaceuticals, textiles, handicrafts, engineering and electronics sectors.
Textile objects like polyester textured yarn, fully drawn yarn of polyester, viscose rayon type yarn, polyester chips, woven cotton fabrics denim 85 percent cotton over 200G/M2, unbleached or bleached cotton fabrics, and dyed cotton fabrics knitted or crocheted have been incorporated under the system.
The items covered under FPS are allowed to get duty credit scrip at 2 percent of FOB value of exports.
‘Niryat Bandhu’ – A scheme for international business mentoring
This scheme is for mentoring first generation entrepreneurs. The officer (Niryat Bandhu) would function in the “mentoring” arena and would be a “handholding” experiment for the young entrepreneurs in global business enterprises.
This scheme is for mentoring first generation entrepreneurs. The officer (Niryat Bandhu) would function in the “mentoring” arena and would be a “handholding” experiment for the young entrepreneurs in global business enterprises.
According to the plan, officers of India’s Directorate General of Foreign Trade (DGFT) will be investing time and knowledge principally to mentor interested individuals who want to carry out business in a legal way.
Procedural simplification
The application of IEC has become online w.e.f. January 1, 2011. This reduces the crossing point of exporters with the regional authorities of the DGFT. An effort is also on to update the IEC database containing more than 7.6 lakhs of IEC. All IEC holders are being urged to cooperate in this effort and update their details online. This will be put into effect by March 31, 2012.
The application of IEC has become online w.e.f. January 1, 2011. This reduces the crossing point of exporters with the regional authorities of the DGFT. An effort is also on to update the IEC database containing more than 7.6 lakhs of IEC. All IEC holders are being urged to cooperate in this effort and update their details online. This will be put into effect by March 31, 2012.
The DGFT has also become India’s first digital signature enabled department in the government of India, which has introduced a higher level of the Encrypted 2048-bit Digital Signature. Digital certification provides a high level of security for online communication such that only the intended recipient can read it. It provides authentication, privacy, non-repudiation and integrity in the virtual world.
http://www.india-briefing.com/news/incentives-indias-textiles-industry-5077.html/
No comments:
Post a Comment