Desk Report,
India eyes capturing ready-made garment market from competitors like Bangladesh
India is looking at the possibility of capturing the ready-made garment export market of competing countries in the United States. The US President Donald Trump has imposed relatively high reciprocal tariffs on Bangladesh, Cambodia and Indonesia, which has created an opportunity for India. They want to exploit that opportunity.
India eyes capturing ready-made garment market from competitors like Bangladesh
This information has emerged in a report by the country’s state-owned bank State Bank of India (SBI). The Economic Times and The Hindu Business Line reported.
The SBI report said that India’s share in ready-made garment exports to the US market is now 6 percent. Along with this, if it can take 5 percent market share from competing countries, India’s gross domestic product (GDP) will grow by 0.1 percent. The report mentioned that due to its strong position in the chemical sector and comparative advantage in the textile sector, India’s ready-made garments and garment industry equipment are regularly exported to the US market. However, India faces fierce competition from Bangladesh, Cambodia, Indonesia and Vietnam in this sector. The report claims that among India’s competitors in the US market, Vietnam is getting a favorable tariff structure. On the other hand, due to the relatively high countervailing duties on Bangladesh, Cambodia and Indonesia, they are under more pressure than India. As a result, Indian garment exporters can capture the export share of Bangladesh, Cambodia and Indonesia in the US market along with Bangladesh.
Ready-made garments are one of the top five export products of Bangladesh, Cambodia and Indonesia in the US market. For example, ready-made garments account for about 88 percent of Bangladesh’s total exports to the US market, 31 percent of Cambodia’s and 15 percent of Indonesia’s. As these countries face additional US tariffs, India is getting an opportunity to strengthen its position in the market, the SBI report states.
Meanwhile, according to the Office of Textiles and Apparel (OTEA) under the US Department of Commerce, Vietnam has surpassed China to become the top exporter of ready-made garments in the US market this year. Last year, China exported the highest amount of ready-made garments worth $16.51 billion to this market. Vietnam, which was in second place, exported $14.98 billion. Bangladesh was in the next position, which exported $7.34 billion worth of ready-made garments. In addition, India and Indonesia exported $4.69 billion and $4.25 billion, respectively.
On July 7, the US announced new tariffs on a total of 14 countries, including Bangladesh, South Korea, and Japan. In this, an additional tariff of 35 percent will be applicable on Bangladeshi products. The White House’s 90-day tariff break is ending. Trump made the announcement before that. Although the tariffs were supposed to take effect from July 9, it has been postponed to August 1. If negotiations can be held with the US administration during this period, the tariff rate may be reduced, otherwise the announced rate will be effective. Although the country implemented a 10 percent countervailing duty on exports of goods from all countries three months ago.
So far this month, the US has announced new countervailing duties on products from 21 countries. Of these, 35 percent on Bangladeshi products, 36 percent on Cambodian products, 32 percent on Indonesian products, 41 percent on Myanmar products, and 30 percent on Sri Lankan products have been imposed. In addition, a countervailing duty of 20 percent may be imposed on Vietnamese products, although President Trump announced this, no agreement has been reached between the two countries so far. On the other hand, the US President has announced that an agreement will be reached with India soon. Indian media is saying that the countervailing duty in the case of India may fall below 20 percent.
Discussions are ongoing between the Bangladesh and US governments to reduce the countervailing duty. A delegation led by Trade Adviser Sheikh Bashiruddin will soon go to Washington for talks. Indonesia has already negotiated with the US and reduced the countervailing duty from 32 percent to 19 percent. It is not yet certain how much the countervailing duty will be on which country’s products.
