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Import duty exemption to benefit Indian garment exporters

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Man-made Fabrics

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Indian Government’s decision to allow additional (duty) benefit on import of specialty man-made fabric will immensely help in increasing Indian exporters’ competitive edge against Bangladesh and Vietnam by offsetting around 2-3 per cent import duties in the Western markets.

“India has been losing to competition from other nations like Bangladesh and Vietnam because of higher labour cost, absence of cluster manufacturing and inability to attract women workforce to reduce labour costs. These countries have started to pose a serious threat by banking on trade agreements and low manufacturing overheads, especially in the EU and the US,” said Ashok Rajani, Chairman, AEPC, which is organizing a nation-wide drive to spread awareness about the new special advance authorization scheme announced by the Centre last month.

It may be mentioned here that India’s ready-made garments exports in the fiscal year 2015-16 reportedly stood at US $ 17.1 billion whereas Bangladesh’s garments exports were valued at US $ 28 billion in the same period. Indian garment exporters pay on an average an import duty of 5 per cent in the EU while Bangladesh pay ‘zero’ duty. The additional reimbursement in the form of the Special Advance Authorization scheme, will help to bridge the gap.

Additionally, Federation of Indian Export Organizations (FIEO) has pointed out that duty-free import is allowed only on ‘specialty’ man-made fabric and not on all man-made fabrics, thus the move will not hit the domestic industry.

 

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