Tirupur looking to gain if Bangladesh loses duty-free access to EU
Tirupur knitwear exporters are positive about Bangladesh losing its duty-free access from the EU for readymade garment (RMG) in 2020 as the country is expected to move up from being a ‘least developed nation’. However, Tirupur exporters can reap the benefits of Bangladesh’s loss only if the Union government provides adequate support to the industry. According to United Nations Conference on Trade and Development (UNCTD), Bangladesh’s per capita income stood at $1,355 in 2016, a 39 per cent increase compared to 2013 ($974). At the current rate, by 2020, its per capita income is predicted to overtake India’s, which stood at $1,706 in 2016. As per the World Trade Organisation, if the country’s per capita income has remained more than $1,000 continuously for three years, it could be classified as a ‘developing nation’.
Indian garments attract about 10 per cent import duties in the EU while Bangladesh enjoys duty free status in many developed markets, including the EU. In fact, Bangladesh’s duty-free access was one of main advantages for RMG manufacturer, while Tirupur knitwear exporters had been repeatedly asking for a level playing field. They have been urging the government to provide adequate sops to sustain the industry. Experts say if Bangladesh loses duty free access, it will provide opportunities to countries like India to compete and buyers will then chose where to source the apparels. However, Tirupur Exporters’ Association president Raja M Shanmugham feels the situation may not really turn in favour of India. For example, when China started losing market share from 39 to 35 per cent in global market, India was expected to gain and improve its share by 3.5 per cent. However, Chinese RMG firms’ then moved manufacturing to labour-rich countries like Vietnam and Cambodia.