The Indian textiles industry wants tweaking of the South Asian Free Trade Area (SAFTA) rules of origin to make use of yarn and fabrics of Indian origin mandatory for exporting apparel to India, according to Confederation of Indian Textile Industry (CITI) chairman Sanjay K Jain. Bangladesh exporting apparel to India duty free is benefiting China's textile exports, he said.

India allowed duty-free import of readymade garments from Bangladesh under SAFTA in 2006, limiting the number to eight million pieces. However, this restriction was lifted in 2010.

Bangladesh imports Chinese fabrics, manufactures garments and exports those to India without the need for paying any import duties. As import of 'made in China' fabrics is meant for export, Bangladesh imposes no import duties on those, and this ends up facilitating backdoor entry of Chinese textiles into India, Jain told a news agency.

Indian garment manufacturers have to pay a 20 per cent import duty if they use the same Chinese fabric, he said.

India's garment imports from Bangladesh increased from $106.72 million during April-December period 2016 to $124.14 million in the corresponding period of 2017, according to CITI statistics.

As India has extended this duty-free quota-free facility to 49 least-developed countries on a non-reciprocal basis and without sourcing restrictions, it is expected that India may face more Bangladesh-type situations in future, Jain said on the sidelines of a seminar on ‘Recent Trends on Eco-Friendly Textiles & Sustainable Fashion’ organised by the JD Birla Institute in Kolkata.

Jain cited the example of the United States, which imposes sourcing restrictions under the North American Free Trade Agreement (NAFTA) for accepting duty-free import of garments from Mexico and other NAFTA members.