Textile imports from Bangladesh fall as rupee hurts

With the depreciation, there is no difference between Indian manufactured apparel and the apparel manufactured in Bangladesh.

The depreciation in the rupee has not only cheered textile exporters but has managed to cheer domestic apparel industry as well. Direct imports of apparel from Bangladesh had picked up in last one year since the government allowed duty free imports of 48 textile items from this eastern neighbor.

Rupee depreciated around 20% since last September when the duty free imports were allowed. Since September to March last year,  textile items worth $1.8 billion were imported from Bangladesh, compared to $587 million in full year before duty free imports were allowed.

Lower labour cost there and removal import duty had made imported goods cheaper by around 20-15% compared to buying apparels from domestic producers. This benefit has been negated by the falling rupee.

However since last couple of months apparel imports from Bangladesh is estimated to have fallen around 60 to 70%.

“Retailers are now looking at sourcing from domestic manufacturers instead of Bangladesh as imports have turned costlier due to the fall in the rupee. The domestic sector has definitely benefited due to retailers are now sourcing from domestic manufacturers,” said Rahul Mehta, president of The Clothing Manufacturers Association. 

Now with the depreciation in the rupee, there is no difference between Indian manufactured apparel and the apparel manufactured in Bangladesh.

Harminder Sahani, managing director of Wazir Advisor,a retail consultancy firm reiterated, “Due to the depreciation in the rupee even many big retailers have cut down on their sourcing from Bangladesh.”

When the duty free imports were allowed, many Retailers had thought of setting up a base in Bangladesh, as cost of production was lower compared to India. These plans are on hold till the time rupee stabilizes.

Bangladesh has also been eating into India's export market share in finished textile products since 2009. Bangladesh’s apparel exports are growing at 16% while India’s apparel exports in 2010-11 grew by four% only.

“Going ahead imports from Bangladesh will witness a further due to the fall in the rupee as now there is barely any difference between importing from Bangladesh or sourcing from India,” said D K Nair, secretary general of Confederation of Indian Textile Industries.