Sun, 03 Feb 2013 14:30:00 GMT | By IANS

Garment industry: Bangladesh gains at expense of India, China

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 percent duty

Garment industry: Bangladesh gains at India, China expense (© Reuters)

Agra: India's garment industry is losing out to Bangladesh due to rising input costs, especially on labour and tax incentives, a minister has said. Bangladesh Commerce Minister Ghulam Muhammed Quader said rising input costs in India and China - the two big players in readymade garments business - offered a good opportunity for his country to expand its readymade garments business. "India is shifting away from the readymade garments business. There has not been any significant investment in India in the readymade garments industry in the recent years," Quader, who was in India to attend the Partnership Summit in Agra, told IANS in an interview here.

He said rising wages and other input costs would make the readymade garments business uncompetitive in India and China. "This will be a big opportunity for Bangladesh to develop its readymade garments business. We are already benefiting from it," he said. The garment industry has become the mainstay of the Bangladesh economy, accounting for more than 80 percent of the country's exports. Bangladesh's exports in 2012 were $24.3 billion, of which garments contributed $19 billion.

Quader said availability of cheap labour was the main reason for the sharp increase in readymade garments business in Bangladesh in recent years. He said many Chinese companies have shifted their production facilities to Bangladesh to take advantage of cheap labour.

"Many Chinese companies are opening production facilities in Bangladesh. Even for their domestic use, they are supplying garments form our country. I hope the Indian companies will also do the same," Quader said. "Wages have been going up in India. Other costs are also going up with rising living standards," he said. Apart from cheap labour, Bangladesh's readymade garments industry also benefits from tax incentives on exports, especially to European countries.

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