Amid the continued financial and political tensions in Bangladesh, Indian exporting companies, notably within the Tirupur clusters, are receiving greater enquiries from a number of international attire manufacturers, together with Primark, Tesco, Decathlon, Duns, JCPenney, GAP, Subsequent, and Walmart, with order conversion anticipated for cargo by early 2025, Mithileshwar Thakur, Secretary Normal of the Attire Export Promotion Council (AEPC) stated.
Because of a file surge within the US greenback’s worth, Bangladesh has confronted a pointy depletion in its overseas change reserves, which fell under $40 billion for the primary time in two years in July final 12 months. With overseas change reserves ample to cowl solely 4 to 5 months of imports, Bangladesh has confronted challenges in importing cotton and cloth, which it historically sources from India. This comes amid tightening financial circumstances within the neighbouring nation.
“This disaster additionally presents a possibility for added employment technology. Capturing simply 10 per cent of Bangladesh’s international attire exports might instantly create 5,00,000 jobs and not directly generate a further 1 million jobs within the Indian attire sector. To grab the chance offered by this improvement, India must urgently tackle points associated to capability augmentation and ability improvement,” Thakur stated.
Most European manufacturers sourcing from Bangladesh, notably within the cost-sensitive section, are going through challenges in instantly shifting orders to different locations, as a result of distinct value benefits provided by the nation, akin to low wage charges, duty-free entry, and its Least Developed Nation (LDC) standing. Nevertheless, a number of outstanding manufacturers have determined to not additional enhance their publicity to Bangladesh for sourcing, Thakur added. Notably, Bangladesh enjoys a 10-15 per cent value benefit over India, as its attire merchandise profit from duty-free entry within the European Union, the UK, and Canada on account of its LDC standing.
India can solely bridge the obligation drawback after it indicators a free commerce settlement with the EU and the UK. At present, a number of Indian producers have arrange factories in Bangladesh on account of India’s labour legal guidelines, issues about unions, and the price drawback.
On Vietnam, Cambodia vying for funding:
Thakur additional stated that international investments are pushed by the political stability index, and the continued instability in Bangladesh presents a major alternative for India to draw investments that may in any other case movement to neighbouring competing international locations akin to Vietnam, Cambodia, and Indonesia.
“Nevertheless, with a robust deal with bettering and upgrading infrastructure, capability growth, expertise infusion, and compliance, India is well-positioned to capitalise on these redirected investments. We’re additionally in talks with companies and consulting companies to have interaction them in bettering productiveness and effectivity within the operations of garment manufacturing firms, which may unlock the underutilised manufacturing capability within the attire sector,” Thakur stated.
On PLI 2.0:
To seize market share and seize the alternatives arising from the reorientation of provide chains on account of Bangladesh’s disaster and the China+1 issue, India should act swiftly to boost its manufacturing capability, shorten manufacturing cycle occasions, and enhance pace to market, along with specializing in workforce skilling and creating a sturdy compliance structure, Thakur stated.
“Accordingly, the PLI 2.0 scheme for every type of clothes, regardless of fibre, with a decreased funding threshold, needs to be launched on an pressing foundation. This scheme would foster funding and scale up manufacturing capability exponentially. For micro-industries, the Amended Know-how Upgradation Funds Scheme (ATUFS) needs to be revived for expertise upgradation, as PLI 2.0 won’t cowl micro-industries inside its scope,” he stated.
On challenges in enter materials imports:
Thakur said that as a result of unavailability of high quality Man-Made Fibre (MMF) cloth from indigenous sources, garment exporters are sometimes depending on cloth nominated by overseas patrons. He added that the “current scheme of particular advance authorisation” for cloth import is “not appropriate for garment exporters” on account of ever-changing market dynamics, designs, patterns, shapes, sizes, geography-specific consumption norms, and fast-changing vogue.
“India’s garment export sector depends closely on imported textile equipment to keep up high quality and international competitiveness, as home equipment manufacturing is inadequate to fulfill demand. Excessive import duties on equipment enhance manufacturing prices, notably following the withdrawal of most end-use obligation exemptions, making Indian garment exports much less aggressive in comparison with international locations like Bangladesh and Vietnam,” he stated.
AEPC has due to this fact requested the Finance Ministry to cut back the present customs duties on textile equipment to zero, along with persevering with the prevailing exemptions, to boost the sector’s effectivity.
With the rising emphasis on ESG (Environmental, Social, and Governance) compliance in key abroad markets, notably within the EU and the US, it’s essential for India to prioritise the upgradation of sustainability-compliance associated infrastructure.
On Bharat Tex & growth of exports:
Bharat Tex 2024 has emerged as a pivotal occasion for India’s textile trade, as this four-day occasion attracted 3,000 patrons from 111 international locations, together with famend international manufacturers akin to Tommy Hilfiger, Calvin Klein, Vero Moda, Jack & Jones, H&M, Goal, and IKEA, Thakur stated.
“The presence of those international giants underscored their rising confidence in India’s textile sector. Deeper engagement of overseas patrons with the Indian textile trade throughout the occasion has contributed to the attire sector’s current double-digit progress throughout this fiscal 12 months, regardless of opposed international market circumstances and geopolitical challenges,” he added.
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