Textile deal signing unlikely during Manmohan's visit

Express (August 28, 2011)


Dhaka may skip inking a textile and jute deal with New Delhi during the Indian premier's visit to Bangladesh after local industry sharply reacted to key clauses of the agreement, officials said Saturday.

India shared a draft of the five-year memorandum of understanding with Bangladesh on August 14, seeking to strike the deal during Manmohan Singh's two-day trip to Dhaka on September 6-7.

But key clauses in the accord such as allowing SAARC Cumulation and yarn import through landports port drew ire from the local textile millers, senior jute and textile ministry officials said.

"They strongly opposed SAARC cumulation and unrestricted import through Benapole land-port. They said local textile mills risk losing their business if Dhaka agreed to the two clauses," said a top official.

He said the ministry of foreign affairs also objected to SAARC Cumulation during an inter-ministerial meeting on the proposed MoU at the secretariat last week.

The SAARC (South Asian Association for Regional Cooperation) Cumulation was a bitter bone of contention between the garment manufacturers and textile entrepreneurs during the better part of last decade.

Under an earlier proposal the European Union (EU) offer Bangladeshi garment makers would have enjoyed duty-free access to the 27-nation bloc by sourcing raw materials such as yarn and fabrics from India and six other South Asian nations under the SAARC cumulation arrangement.

But textile millers vehemently protested the proposal as it would have ended the protection they had long enjoyed in the local market. Their opposition forced the government to stand against the EU move.

Meanwhile, the EU has enforced its new Rules of Origin formula from January 1 this year for all LDCs, relaxing conditions for domestic value addition.

In the bilateral MoU, it was proposed that Bangladesh agree to Indian request for extending the benefit of certification of GSP (Generalised System of Preferences) on the fabrics and other inputs imported from India towards GSP benefits from EU under the SAARC cumulation.

"Unless the two provisions are amended or dropped there is no way we can sign the MoU with India. I don't think the MoU is possible during the Indian prime minister's visit to Bangladesh," the textile ministry official said.

"We also don't have enough time to fix these issues ahead of the Indian PM's visit," he added.

Another official said Bangladesh would like to add some of its own pressing issues in the deal, making it a win-win for both Dhaka and New Delhi.

He said Bangladesh, the world's second largest cotton importer, wants a guarantee from India that it would supply the garment raw material to its neighbour without any strings attached.

Bangladeshi spinners have been hit hard by volatile cotton prices in the international market and the country now seeks bilateral deals with major cotton producers to hedge against jumpy prices.

The official said India was "non-committal" on guaranteed cotton export to Bangladesh even though Dhaka was willing to buy the commodity at the market rates.

"We are ready to reciprocate the benefit by guaranteeing to export a major chunk of our raw jute to India. But during an Indo-Bangla joint secretary meeting last month, the Indian officials made no commitment on the issue," he said.

Under the MoU, Dhaka would seek removal of some non-tariff barriers that New Delhi has imposed on Bangladeshi saris and some jute goods, he said.

"Our saris such as Jamdani, Tangail and Benarosi have gained a foothold in India. But India has imposed non-tariff barriers including testing the saris at a lab in Benaras," he said.

"The lab takes 15 days to complete test and then send the results by post, killing more time in the process, although it can be easily sent through e-mail. This time wasting tactics affect our exports," he added.

Officials said Dhaka was largely agreeable to other clauses of the MoU including collaboration between National Institute of Fashion Technology of India and BGMEA Institute of Fashion Technology of Bangladesh.

The two would collaborate on fashion forecasting, curriculum design, joint research projects and student exchange programmes.

Under the deal, both nations will assist each other in research and development (R&D), technical collaboration in product development and manufacturing, testing and certification in accordance with established international requirements in the fields of textiles and clothing, silk, handlooms and fashion technology.

Academic collaboration will be forged between Sardar Vallabhai Patel International School of Textiles and Management with the Bangladesh Institute of Textiles and Management.

India will also collaborate with the Bangladesh National Institute of Textiles Research and Design.