MBA 2008-2011 (Part Time)

(Term -SEVENTH)
Project
ON

SCOPE OF DENIM EXPORT IN BANGLADESH

Submitted To:
Prof. Dr.P.K.Chugan
Submitted By:
HIREN PATEL
Roll No: 082127

CONTENTS
No Particulars Page
1 INTRODUCTION 3
2 DENIM AS A TEXTILE PRODUCT 3
3 TEXTILE INDUSTRY ANALYSIS IN INDIA 4
4 DENIM MARKET SIZE AND GROWTH IN INDIA 12
5 ITC CLASSIFICATION 13
6 INDIA’S EXPORT POLICY FOR DENIM 14
7 SCOPE OF DENIM EXPORT IN BANGLADESH ( EXIM POLICY, TARRIF, QUATA, TEXTIL
E ECONOMY) 17
8 PRICES 25
9 OTHER RECOMMENDATION FOR DENIM EXPORT 28
10 BIBLIOGRAPHY 29

INTRODUCTION
“Product “Denim”:
Denim is a cotton twill, in which the weft passes under two (twi- "double") or m
ore warp fibers. This produces the familiar diagonal ribbing identifiable on the
reverse of the fabric. Denim is used for blue jeans, with a copper rivet to str
engthen the pocket. Mainly designed for work, they became popular among teenager
s starting in the 1950s. Historic brands include Levi’s and Wrangler. Today jeans
are a very popular form of casual dress around the world and come in many styles
and colors, with the "blue jeans" particularly identified with the American Cul
ture.
The denim blue jeans was initially sold by a German-Jewish goods merchant Levi S
trauss under the "Levi s" name for the mining communities of California in the 1
850s. One of Strauss s customers was Jacob Davis, a tailor who frequently purcha
sed bolts of cloth from the Levi Strauss & Co wholesale house. After one of Davi
s s customers kept purchasing cloth to reinforce torn pants, he had an idea to u
se copper rivets to reinforce the points of strain, such as on the pocket corner
s and at the top of the button fly. And later he joined Levi Strauss & Co.
en.wikipedia.org/wiki/Denim
Major Exporter of Denim from India:
India is one of the major producers of denim fabrics and denim garment in the wo
rld. India is one of the best integrated textile players with having large numbe
r of composite mills (from Spinning to weaving to garment manufacturing). India
ranks among the top ten denim manufactures of world.
The major exporter of denim from India are
1 . Arvind Ltd 13. rient Craft Ltd
2 . Ashima Ltd 14. Alok Industries Ltd
3. Aarvee denims ltd 15. Sutlej Industries Ltd
4. Chiripal group 16. andan Exim Ltd
5. Shahi Exports Ltd 17. Donear Industries ltd
6. VF Arvind Ltd 18. Bombay Rayon Fashion Ltd
7. UCO Raymond Ltd 19. Modern Denim
8. Bharat Vijay Mills ltd 20. ahar group
9. Creative Ltd 21. Aditya Birla Nuvo Ltd
10.ardhaman Spinning and Weaving Mills ltd 22. Madura Garments Ltd
11. BSL group 23. Gokaldas Exports Ltd
12. RSWM group
TEXTILE INDUSTRY ANALYSIS IN INDIA

INTRODUCTION:
Current Status
The textile industry holds significant status in the India. Textile industry pro
vides one of the most fundamental necessities of the people. It is an independen
t industry, from the basic requirement of raw materials to the final products, w
ith huge value-addition at every stage of processing.
Today textile sector accounts for nearly 14% of the total industrial output. Ind
ian fabric is in demand with its ethnic, earthly colored and many textures. The
textile sector accounts about 30% in the total export. This conveys that it hold
s potential if one is ready to innovate.
The textile industry is the largest industry in terms of employment economy, exp
ected to generate 12 million new jobs by 2010. It generates massive potential fo
r employment in the sectors from agricultural to industrial. Employment opportun
ities are created when cotton is cultivated. It does not need any exclusive Gove
rnment support even at present to go further. Only thing needed is to give some
directions to organize people to get enough share of the profit to spearhead dev
elopment.
Segments
Textile industry is constituted of the following segments
o Readymade Garments
o Cotton Textiles including Handlooms (Millmade / Powerloom/ Handloom)
o Man-made Textiles
o Silk Textiles
o Woollen Textiles
o Handicrafts including Carpets
o Coir
o Jute
The cottage industry with handlooms, with the cheapest of threads, produces aver
age dress material, which costs only about 200 INR featuring fine floral and oth
er patterns. It is not necessary to add any design to it. The women of the house
spin the thread, and weave a piece in about a week.
It is an established fact that small and irregular apparel production can be pro
fitable by providing affordable casual wear and leisure garments varieties.
Now, one may ask, where from the economy and the large profit comes in if the lo
west end of the chain does not get paid with minimum per day labour charge. It i
s an irony of course. What people at the upper stratum of the chain do is, to ap
ply this fabric into a design with some imagination and earn in millions. The st
raight 6 yards simple saree, drape in with a blouse with embroideries and bead w
ork, then it becomes a designer¡¦s ensemble. For an average person, it can be a slan
t cut while giving it a shape, which can double the profit. Maybe, the 30 % cred
it that the industry is taking for its contribution to Indian economy as good as
60 % this way. Though it is an industry, it has to innovate to prosper. It has
all the ingredients to go ahead.
Current Scenario
Textile exports are targeted to reach $50 billion by 2010, $25 billion of which
will go to the US. Other markets include UAE, UK, Germany, France, Italy, Russia
, Canada, Bangladesh and Japan. The name of these countries with their backgroun
d can give thousands of insights to a thinking mind. The slant cut that will be
producing a readymade garment will sell at a price of 600 Indian rupees, making
the value addition to be profitable by 300 %.
Currently, because of the lifting up of the import restrictions of the multi-fib
re arrangement (MFA) since 1st January, 2005 under the World Trade Organization
(WTO) Agreement on Textiles and Clothing, the market has become competitive; on
closer look however, it sounds an opportunity because better material will be po
ssible with the traditional inputs so far available with the Indian market.
At present, the textile industry is undergoing a substantial re-orientation towa
rds other then clothing segments of textile sector, which is commonly called as
technical textiles. It is moving vertically with an average growing rate of near
ly two times of textiles for clothing applications and now account for more than
half of the total textile output. The processes in making technical textiles re
quire costly machinery and skilled workers.
The application that comes under technical textiles are filtration, bed sheets a
nd abrasive materials, healthcare upholstery and furniture, blood-absorbing mate
rials and thermal protection, adhesive tape, seatbelts, and other specialized ap
plication and products.
Strengths
India enjoys benefit of having plentiful resources of raw materials. It is one o
f the largest producers of cotton yarn around the globe, and also there are good
resources of fibres like polyester, silk, viscose etc...
There is wide range of cotton fibre available, and has a rapidly developing synt
hetic fibre industry. India has great competitiveness in spinning sector and has
 presence in almost all processes of the value chain.
Availability of highly trained manpower in both, management and technical. The c
ountry has a huge advantage due to lower wage rates. Because of low labor rates
the manufacturing cost in textile automatically comes down to very reasonable ra
tes.
The installed capacity of spindles in India contributes for 24% share of the wor
ld, and it is one of the biggest exporters of yarns in the global market. Having
modern functions and favorable fiscal policies, it accounts about 25% of the wo
rld trade in cotton yarn.
The apparel industry is largest foreign exchange earning sector, contributing 12
% of the country s total exports.
The garment industry is very diverse in size, manufacturing facility, type of ap
parel produced, quantity and quality of output, cost, requirement for fabric etc
. It comprises suppliers of ready-made garments for both, domestic or export mar
kets.
Weakness
Massive Fragmentation:
A major loop-hole in Indian textile industry is its huge fragmentation in indust
ry structure, which is led by small scale companies. Despite the government poli
cies, which made this deformation, have been gradually removed now, but their im
pact will be seen for some time more. Since most of the companies are small in s
ize, the examples of industry leadership are very few, which can be inspirationa
l model for the rest of the industry.
The industry veterans portrays the present productivity of factories at half to
as low as one-third of levels, which might be attained. In many cases, smaller c
ompanies do not have the fiscal resources to enhance technology or invest in the
high-end engineering of processes. The skilled labor is cheap in absolute terms
; however, most of this benefit is lost by small companies.
The uneven supply base also leads barriers in attaining integration between the
links in supply chain. This issue creates uncontrollable, unreliable and inconsi
stent performance.
Political and Government Diversity:
The reservation of production for very small companies that was imposed with an
intention to help out small scale companies across the country, led substantial
fragmentation that distorted the competitiveness of industry. However, most of t
he sectors now have been de-reserved, and major entrepreneurs and corporate are
putting-in huge amount of money in establishing big facilities or in expansion o
f their existing plants.
Secondly, the foreign investment was kept out of textile and apparel production.
Now, the Government has gradually eliminated these restrictions, by bringing do
wn import duties on capital equipment, offering foreign investors to set up manu
facturing facilities in India. In recent years, India has provided a global manu
facturing platform to other multi-national companies that manufactures other tha
n textile products; it can certainly provide a base for textiles and apparel com
panies.
Despite some motivating step taken by the government, other problems still susta
ins like various taxes and excise imbalances due to diversification into 35 stat
es and Union Territories. However, an outline of VAT is being implemented in pla
ce of all other tax diversifications, which will clear these imbalances once it
is imposed fully.
Labour Laws:
In India, labour laws are still found to be relatively unfavorable to the trades
, with companies having not more than ideal model to follow a hire and fire po
licy. Even the companies have often broken their business down into small units
to avoid any trouble created by labour unionization.
In past few years, there has been movement gradually towards reforming labour la
ws, and it is anticipated that this movement will uphold the environment more fa
vorable.
Distant Geographic Location:
There are some high-level disadvantages for India due to its geographic location
. For the foreign companies, it has a global logistics disadvantage due the ship
ping cost is higher and also takes much more time comparing to some other manufa
cturing countries like Mexico, Turkey, China etc. The inbound freight traffic ha
s been also low, which affects cost of shipping - though, movement of containers
are not at reasonable costs.
Lack of trade memberships:
India is serious lacking in trade pact memberships, which leads to restricted ac
cess to the other major markets. This issue made others to impose quota and duty
, which put scissors on the sourcing quantities from India.
Opportunities
It is anticipated that India s textile industry is likely to do much better. Sin
ce the consumption of domestic fibre is low, the growth in domestic consumption
in tandem is anticipated with GDP of 6 to 8 % and this would support the growth
of the local textile market at about 6 to 7 % a year.
India can also grab opportunities in the export market. The industry has the pot
ential of attaining $34bn export earnings by the year 2010. The regulatory polic
es is helping out to enhance infrastructures of apparel parks, Specialized texti
le parks, EPZs and EOUs.
The Government support has ensured fast consumption of clothing as well as of fi
bre. A single rate will now be prevalent throughout the country.
The Indian manufacturers and suppliers are improving design skills, which includ
e different fabrics according to different markets. Indian fashion industry and
fashion designers are marking their name at international platform. Indian silk
industry that is known for its fine and exclusive brocades, is also adding massi
ve strength to the textile industry.
The industry is being modernized via an exclusive scheme, which has set aside $5
bn for investment in improvisation of machinery. International brands, such as L
evis, Wal-Mart, JC Penny, Gap, Marks & Spencer and other industry giants are sou
rcing more and more fabrics and garments from India. Alone Wal-Mart had purchase
d products worth $200mn last year and plans to increase buying up to $3bn in the
coming year. The clothing giant from Europe, GAP is also sourcing from India.
Anticipation
As a result of various initiatives taken by the government, there has been new i
nvestment of Rs.50,000 crore in the textile industry in the last five years. Nin
e textile majors invested Rs.2,600 crore and plan to invest another Rs.6,400 cro
re. Further, India s cotton production increased by 57% over the last five years
; and 3 million additional spindles and 30,000 shuttle-less looms were installed
.
Forecast till 2010 for textiles by the government along with the industry and Ex
port Promotion Councils is to attain double the GDP, and the export is likely at
tain $85bn. The industry is anticipated to generate 12mn new jobs in various sec
tors.
How to promote textile exports
For promotion of exports the measures which should be taken up are
• Up gradation of textiles sector
• Policy level decision to achieve export target
• Woven segment of readymade garment sector and knitwear have been de-reserved
• Technology Up-gradation Fund Scheme to be pursued till next five years
• Liberalization of FDI Policy with up to 100 per cent foreign equity participatio
n
• Import of capital goods at 5% concession rate of duty with appropriate export
obligation under
Export Promotion Capital Goods (EPCG) Scheme and clearly laid out EXIM policy
• Advance Licensing Scheme with standard input-output norms
• Prescribed Duty Exemption Pass Book (DEPB) Scheme credit rates
• Duty Drawback Scheme wherein the exporters are allowed refund of the excise and
import duty loss on raw materials
• Construction of Apparel International Mart by Apparel Export Promotion Council t
o provide a world class facility to the apparel exporters to exhibit products
and built international reputation
• Setting up of quality checking laboratories
• Apparel Park for Exports Scheme to invite international production units along w
ith in-house production floors.

ezinearticles.com/?Textile-Industry-in-India&id=373841
CURRENT FACTS ON INDIAN TEXTILE INDUSTRY
• India retained its position as world’s second highest cotton producer.
• Acreage under cotton reduced about 1% during 2008-09.
• The productivity of cotton which was growing up over the years has decreased in
2008-09.
• Substantial increase of Minimum Support Prices (MSPs).
• Cotton exports couldn t pick up owing to disparity in domestic and international
cotton prices.
• Imports of cotton were limited to shortage in supply of Extra Long staple cotton
s.
business.mapsofindia.com › India Industry
THE GLOBAL TEXTILE ENVIROMENT & POST QUOTA SCENARIO:
MFA (Multi-Fibre Agreement) was an agreement through which a particular country
was restricted to export its textile products beyond a certain level to European
and US markets. So, a specific quota was fixed for each country, and no country
could exceed the quantity assigned. Thus, the motive behind this agreement was
to provide a window of opportunity for the under developed and developing econom
ies, or simply to save the interest of the domestic textile industries in the Eu
ropean Union (EU) and the US.
The textile segment has been governed by many agreements since last 30 years. To
name a few: the Short Term Cotton Arrangement in the year 1961, the Long Term C
otton Arrangement from 1962 to 1973, and the Multi-fibre Arrangement from 1974 t
o 1994. It is clear, efforts to liberalise trade and textiles has been tough. Th
e key players from the developed countries took protective measures and made hea
vy investments in textile, and the result, the developed countries became the mo
st capital-intensive nations within the textile manufacturing segment.

At the same time, developing countries were subject to quantitative restrictions

, thus keeping a strong hold on textile exports, keeping the edge by optimum tex
tile production. The MFA was terminated on 31 December 1994, with entry into for
ce of the WTO and its Agreement on Textiles and Clothing (ATC) on 1 January 1995
. It was done in order to have a multi-lateral liberal system of trading by term
inating quota from textile exports by the end of 2005 But presently the single
biggest factor influencing the textile industry appears to be the end of the te
xtile quota regime of quantitative import restrictions under the multi-fibre arr
angement (MFA) on 1st January, 2005 under the World Trade Organisation (WTO) Agr
eement on Textiles and Clothing. The removal of quotas, seen as an opportunity b
y many, including the government, is driving investment and liberalisation in th
e textile space. Hence it has become very necessary for India to exploit this op
portunity.
Post 2005 however, it has emerged (as expected) that there are several reasons h
olding India’s textile industry back. This is on account of the lesser presence of
modern machinery, efficient labour policies, infrastructure and foreign investm
ent policies.
Chinese companies have the advantage of lower power costs and better power avail
ability over Indian companies, and they also enjoy shorter lead time to the US,
which is an advantage. Other countries like Mexico and Turkey have more efficien
t port systems or more favourable locations also possess some advantage. The Ind
ian labour laws which prevent retrenchment of workers from sick units are anothe
r hurdle in the path of competitiveness.
Even with all these problems, Indian textile exports have grown post the 2005 re
moval of quotas, but this growth has been a modest 10-11%. During the same perio
d, textile exports from China have grown at rates in excess of 20%, and from a l
arger base at that.

The export markets however, still present a considerable opportunity which the I
ndian industry should be able to tap. The Chinese threat, while very real, has b
een offset to some extent by recent developments. The extremely high growth of C
hinese textile exports to the U.S has resulted in quotas being reinstated for Ch
inese goods in certain segments. The European Union too has reached an agreement
with china which has seen china agreeing to curtail exports. A school of though
t also exists which maintains that companies in the U.S would prefer to spread o
ut their suppliers, as placing all their eggs in the Chinese basket may be somew
hat risky. The Indian government has also not been entirely blind, introducing m
easures such as the national technology up gradation fund and removing the diffe
rential taxation scheme which discriminated against large units. They have also
allowed textile units to build and operate captive power plants, which should ea
se the power problem. Some companies are also making use of the SEZ’s to get aroun
d labour laws. The domestic market too, is projected to grow in the coming years
. On the whole, indications for the textile industry are largely positive. But a
s is the case with every industry, only the well run companies will be able to e
xploit the export market to the fullest.
In 1995, the World Trade Organization (WTO) renewed the MFA with an Agreement on
Textiles and Clothing (ATC), which agreed that all quotas on textiles and cloth
ing would disappear between WTO member countries on January 1, 2005.

The expiration of ATC marked the end of quotas, limiting textile and clothing tr
ade between the WTO members. Huge developing countries like China, India and Pak
istan were the ones most restricted by the quotas. While India and China are lik
ely to emerge as winners, the main losers after quota will be quota-restricted c
ountries who have enjoyed the benefits and protection for more than 40 years. Th
e fears that prices will fall dramatically after quotas has been eliminated.
The post quota market has changed with producers already affected by changes in
retailing. Big retailers are buying up independent brands to give consumers more
value and enhance their shopping experience.

DENIM MARKET SIZE AND GROWTH IN INDIA

Denim Market In India
There are 23 denim mills in India
 600 million mtrs/ Year denim manufacturing capacity ( installed/under installa
tion)
Approx. 79 % of the jeans sold in India are tagged with a label, the rest by t
ailors and
localized manufacturers.
The menswear obtains a majority share of the Indian market with around 75 perc
ent,
women’s wear at around 15 per cent and kids wear at around 10 percent. (
This is because the
Indians are still very conservative with most of the denim wear in wom
en’s segment being
worn in the cities )
Domestic Market sells approx 300 million metres/ annum: Domestic denim market o
f India
is huge and growing . The per capita consumption of jeans in India is,
however, only about
0.3 jeans per person p.a.
Where as export of denim fabrics is around 170 -180 million metres/ annum.
Indian Domestic Denim Market
Denim Fabric Selling Centre Sales/Month (In Million Mtrs.) Sales/Annum (in
Million Mtrs.)
Ahmedabad 0.6 7.2
Delhi &Nearby 10 120
Mumbai 6 72
Ulhasnagar 3 36
Kolkatta 2.5 30
Bellari 0.5 6
Indore 0.3 3.6
Others 1 12
Total 23.9 286.8
The domestic denim market in India consumes about 300 million mtrs of denim curr
ently and at a 10% CAGR , can reach about 530 million mtrs in 2015.
www.denimsandjeans.com/...denim.../denim.../world-denim-market-a-report-on-capac
itiesmarket-size-forecasts-etc/
Denim consumption boost up in India Various apparel categories, excluding innerw
ear, jeanswear too is connected to brand tags in India. A label tag is a must no
w on the back waist panel of even tailored garments. As regards to contribution
of the branded section in each category percentages may vary, approximately 79 p
ercent of the jeans sold in India tagged with label, the rest of jeans are suppl
ied by tailors and localised manufacturers with no-name.
Denim wear consumption in India and the business is itself changes almost everyd
ay with new modification and new brands, it is also becoming a part of its actio
n by determining the size, character and make up and it also requires a profound
market research study.
According to a survey report, by considering the aspects of socio-economic, cult
ural, emotional and functional backgrounds and its applications there are four t
ype of branded jeanswear market available in India.
ezinearticles.com/?India-Among-Top-Jeanswear-Marke
ITC (HS) Classification
Introduction
There are millions of trade transactions occurring each year. These transactions
are classified under approximately 8,000 different products. Every item that is
exported is assigned a unique 10-digit identification code.
The Harmonization Code System (HS-Code) is a system of progressively more specif
ic identifiers for a commodity. For example, concentrated frozen apple juice is
assigned a 10-digit identifier. This number is an aggregate of a series of codes
 starting with a broad category assigned a 2-digit identifier described as Prepa
rations of Vegetables, Fruit, Nuts etc. It is then assigned a 4-digit identifier
described as fruit juices and vegetable juices, etc. The 6-digit identifier is
described as apple juice.
CATEGORY XI - TEXTILE & TEXTILE ARTICLES
Code 50 Silk, including yarns and woven fabric thereof
Code 51 Wool & animal hair, including yarn & woven fabric
Code 52 Cotton, including yarn and woven fabric thereof
Code 53 Other vegetable textile fibers; paper yarn and woven fabrics of
paper yarn
Code 54 Manmade filaments, including yarns & woven fabrics
Code 55 Manmade staple fibres, including yarns & woven fabrics
Code 56 Wadding, felt and nonwovens; special yarns; twine, cordage, rope
s and cables and articles thereof
Code 57 Carpets and other textile floor coverings
Code 58 Special woven fabrics; tufted textile fabrics; lace; tapestries;
trimmings; embroidery
Code 59 Impregnated, coated, covered or laminated textile fabrics; texti
le articles for industrial use
Code 60 Knitted or crocheted fabrics
Code 61 Apparel articles and accessories, knitted or crocheted
Code 62 Apparel articles and accessories, not knitted or crocheted
Code 63 Other textile articles; needlecraft sets; worn clothing and worn
textile articles; rags
52094200 - Denim HS Code and Indian Harmonised System Code.
(ii) Technological Upgradation
To usher in the next phase of export growth, India needs to move up in the value
chain of export goods.This objective is sought to be achieved by encouraging te
chnological upgradation of our export sector. A number of initiatives have been
taken in this Policy to focus on technological upgradation; such initiatives inc
lude
• EPCG Scheme at zero duty has been introduced for certain engineering products, e
lectronic products,basic chemicals and pharmaceuticals, apparel and textiles, pl
astics, handicrafts, chemicals and allied products and leather and leather produ
cts
www.fabrics-manufacturers.com › http://exim.indiamart.com/product-classification/h
s-code-textile-articles.html
INDIA’S EXPORT POLICY FOR DENIM
Changes suggested in cotton export policy by PMEAC
Sudden changes in the cotton export policy are likely to affect the farmer’s inter
est, thereby, creating an impact in India’s image as a dependable international su
pplier, informed the Prime Minister’s Economic Advisory Council (PMEAC).

In its economic viewpoint for the current fiscal, PMEAC informed that, the cotto
n year 2009-10 has undergone a series of sudden policy changes, which has alread
y initiated an element of uncertainty for the stakeholders, which is unacceptab
le.
During April and May this year, a number of policy decisions were taken with res
pect to exports of cotton. Starting with the duty that was imposed to cut down e
xports, followed by suspension of registered new export contracts, and the final
blow was forcing shipments to undergo a license regime.

PMEAC avers that, all these sudden changes will harm India’s stand as a trustworth
y global supplier. The export restrictions were levied to curb the steep increas
e in outward shipments of cotton and rising local prices.

But these restrictions were later withdrawn in May, following protests from lead
ing cotton producing states such as Gujarat. Therefore, the council feels that i
t is vital to decide now on the policy regime for next year, and accordingly fix
a target for exports.
But PMEAC has directed that, policy makers should first fix the exports target,
which should be based on the availability of cotton from local production, its u
se by the industry and the required stocks by the end of the cotton season.

More over, it was also suggested that all stakeholder ministries such as Textile
s and Agriculture, must be involved in the task of fixing the export target. PME
AC informed that, the current export duty of Rs 2,500 per ton of cotton is far f
rom just being unreasonable.
www.fibre2fashion.com/news/textile-news/newsdetails - July 26, 2010 (India)
India Allows Cotton Exports From Oct. 1 Without Licenses
India, the world s second-largest cotton supplier, will allow cotton exports wit
hout mandatory licenses from the next marketing year starting Oct. 1, a governme
nt order said Tuesday, likely boosting the country s shipment and prices. But th
e contracts for cotton exports will have to be registered with the Textile Commi
ssioner before shipments are made, the government order said.

India s textile exports plummet, Bangladesh gains

The global economic slowdown and unfavourable exchange rate variations have take
n a heavy toll on India s textile exports. This has been the case with other maj
or Asian textile exporters such as Srilanka, Pakistan, China, Thailand, Vietnam
while Bangladesh has withstood the crisis and has actually grown during the glob
al economic slowdown.
In 2008/09, Bangladesh clothing exports rose by 15.4% after increasing by 16.2%
in the previous year but in the first five months of 2009/10 they fell by 6.7%.
However, exports will benefit if proposals to grant duty-free treatment to Bangl
adeshi clothing in the US market come to fruition according to a report titled "
World Textile and Apparel Trade and Production Trends: South Asia and South-East
Asia, 2010 Edition" released by Research and Markets.

Exports of textiles and clothing (T&C) was US$ 22146 million in 2007-08, but dec
lined to US $ 20939 million in 2008-09. During 2009-10 (upto December, 2009) Ind
ia exported T&C items worth US $ 15044.89 million as against US $ 15970.50 milli
on in the corresponding period of financial year 2008-09, Panabaaka Lakshmi, Min
ister of State for Textiles recently informed Lok Sabha .

Analysts point out that future export growth of Indian textiles industry would h
inge on government measures to boost investment in modernisation and innovation.
Dayanidhi Maran, Union Minister for Textiles asserts that government is making
every effort to increase India s presence in global market. Among the measures s
uggested include exploiting potential markets where the present market share can
be further enehance. The LAC countries viz. Brazil and Argentina have been iden
tified among such focused countries because of their immense potential.

Maran recently said that Indian Textiles sector recorded significant recovery in
spite of the global financial crisis, inflationary trends and volatility in com
modity prices, which led to build up of strong demand side pressures.

The Ministry of Textiles initiated policies for faster and inclusive growth and
participatory development. The objective was to maintain the incipient export gr
owth momentum, increasing production and productivity in cotton and cotton yarn,
enhancing value addition in garment and apparel sectors, promoting rich heritag
e of handlooms and handicrafts, institutional strengthening in jute sector, and
enhanced acreages under mulberry production and safeguarding employment opportun
ities. In addition, the Ministry of Textiles tried its best to utilize the bette
r growth prospects of Indian economy for attracting larger capital flows/ foreig
n direct investment, Dayanidhi Maran said

In the post quota era, India has India’s textiles & clothing (T&C) export register
ed robust growth of 25% in 2005-06, recording a growth of US$ 3.5 billion in val
ue terms thereby reaching a level of US$ 17.52 billion and the growth continued
in 2006-07 as T&C exports were US$19.15 billion recording an increase of 9.28% o
ver previous year. Though India’s T&C exports in 2007-08 at US$ 22.13 billion were
badly affected by strong appreciation of the Indian rupee against the US dollar
, it still managed to record a healthy growth of 15.59% in US dollar terms (in r
upee terms, the growth was about 2.76%), according to India s Ministry of Textil
es.

The Ministry hopes that Technology Upradation Fund scheme (TUFS) will give the a
dded boost to India s textile modernisation. For the first time, in a major stim
ulus to the industry, a subsidy of Rs 2,546 crore was released on August 06, 200
9, in a single tranche, with the amount credited to the bank accounts of 12.514
beneficiaries in a record time of 72 hours (3 working days) reconstituting an ef
fective addition to the stimulus packages announced by the Government. During 20
09-10, Rs. 2,885.98 crore was disbursed as subsidy under TUFS.

The government has come up with a National Fibre Policy and its draft has been p
ut up in public domain yesterday for wider consultation .The Ministry has also c
ome up with a one time grant of Rs 200 cr for setting up 20 Effluent Treatment P
lant (CETP) by dyeing units in Tirupur to ensure zero liquid discharge.

The Ministry had also provided enhanced support handloom marketing, modernisatio
n of 18 mills under National Textile Corporation and providing grants under Sche
me for Integrated Textile Parks (SITP) which was released for 17 parks.

Despite the global slowdown, share of India’s textile exports in total exports inc
reased to 12.05% from 10.82% in 2008-09. In a ‘Look East Policy’, new markets have b
een tapped to promote exports, besides consolidating existing markets like EU an
d US. As part of the initiatives, mega textile shows have been held to capture n
ew markets in Japan, South Asia, Australia, Latin America and South Africa, acco
rding to Ministry of Textiles.
Some analysts pointed out that both India and China are expected to face tough c
ompetition from Bangladesh when it comes to textiles exports. India s new initia
tives may not yield results soon and therefore the lull in exports may continue
atleast for a year, they added.

Published on: June 29, 2010 at 19:10 www.commodityonline.com

ABOUT COUNTRY BANGLADESH

MAP:

Capital Cities... Dhaka

Population: 158,065,841
GDP: $242,400,000,000 (USD)
Total Area: 144,000 (sq km) 55,598 (sq mi)
Currency: taka
Introduction
Textiles play an important role in the economic life of Bangladesh. The sector,
in addition to meeting the demand of fabrics and apparel domestically, contribut
es significantly to the textiles and clothing (T&C) export trade. At present, mo
re than 78 per cent of the country’s export earnings come from T&C. The sector pro
vides employment to a workforce of 4.5 million and contributes 40 per cent value
addition to the manufacturing sector.
Textiles as a whole play the most significant role in the alleviation of poverty
, provision of employment to rural women and economic empowerment of women. The
sector provides 200,000 jobs in the waste recycling industry related to ready-ma
de garments (RMG), contributes 10.5 per cent to GDP, provides indirect employmen
t for an 800,000-workforce in accessories industries related to T&C and generate
s a huge cliental base for banking, insurance, shipping, transport, hotel, cosme
tics, toiletries and related economic activities. Bangladesh entered the interna
tional T&C trade in the early part of the 1980s, when the Government opted for a
market-oriented economy. Investments in the primary textile sector (PTS), i.e.,
spinning, weaving and dyeing-printing-finishing (textile product processors), s
tarted at the same time as the expansion and entry of ready-made garments (appar
els and clothing) into international markets. When Bangladesh entered the global
T&C markets, export earnings were insignificant. For example, during fiscal yea
r 1981/82 (July-June), the share of T&C in total export earnings was 1.1 percent
(comprising only woven garments). Over the years, that share increased to 78 pe
r cent of the total earnings, to reach US$ 8.1 billion during fiscal 2005/06. Im
mediately after liberation in 1972, the Government opted for a socialistic econo
mic policy by nationalizing all big industries. At that time, all large textile
mills were nationalized. However, when the Government opted for a market-oriente
d economic policy, the textile mills were gradually handed over to the private s
ector in phases.
Ministry of Textiles records show that as of 2006 there were 23 textile mills un
der Government ownership with 400,000 installed spindles and a total capacity of
40 million kg of yarn production. However, most of the mills are non-functional
and the machinery is obsolete. Although the performance of public sector mills
has slowly declined, private sector mills have flourished under the supportive p
olicy of successive governments. Table 1 provides an overview of the growth patt
ern of primary textile mills. Since the T&C sector comprises spinning, weaving,
dyeing-printing-finishing,
handlooms and power looms, export-oriented ready-made garment units and other an
cillary textile units table 2 provides a comprehensive idea about the size and c
ontribution of each sector in the national economy: There are different types of
mills in the overall T&C structure of Bangladesh.

General export trends for some new products

Denim trousers
Bangladesh emerged as the number one supplier of denim clothes to the European m
arket, commanding a 27 per cent share of import during the first half of 2006. E
xporters said that increasing availability of locally- produced denim fabrics an
d the enhanced ability to offer the most competitive prices helped Bangladesh ga
in a greater market share. Restrictions in the European Union on certain types o
f apparel from some Asian countries have also benefited the Bangladesh denim sec
tor to a great extent.
In terms of earnings, however, Bangladesh ranked third because of the exporters’ c
oncentration on low-cost dresses. The latest compilation of European Union data
shows that, during January-June 2006, Bangladeshi apparel manufacturers shipped
about 24 million pairs of denim jeans in the men’s and boys category to European i
mporters. Export volume during the same period increased by 26.15 per cent and s
tood at the top with 26.76 per cent of total European imports of denims. On aver
age, Bangladeshi denim exporters charged a 4.03 unit price for men’s and boys’ jeans
, whereas the global average was 7.38 per unit.
In the women’s and girls’ denim category, Bangladeshi exporters saw the volume incre
ase by more than 91 per cent to about 17 million pairs during January-June 2006.
Bangladesh also topped the list in this category with 18.59 per cent of the Eur
opean Union market share, which was more than double the share for the previous
year. However, Bangladesh lagged behind in terms of earnings from women’s and girl
s’ denim clothes. Local capacity for producing denim fabrics has expanded signific
antly in recent years, which has helped apparel manufacturers to cater to the de
mand from European buyers. With the continuous development and penetration in th
e textile market as well as diversification in products, there has been a signif
icant demand for fabrics and yarn during the past five years. However, domestic
fabric manufacturing mills cannot cope with the demand. As such, a vast scope ex
ists for investment in fabric production
Major policy options initiated in line with the changed multilateral regime unde
r WTO
Following the establishment of WTO and the implementation of the Uruguay Round a
greement, the following measures have been taken in response to trade liberaliza
tion policy, with regard to the T&C subsector of Bangladesh:
In line with the ATC provisions, the Unilateral Quantitative Restrictions on imp
orts of textile products were withdrawn by notifications issued in 1995,1
998 and 2002.
The customs duty on imports of textile fibres, yarn and fabrics in 2001were at f
ive levels – zero per cent, 5 per cent, 15 per cent, 25 per cent and 37.5 pe
r cent. This has been reduced to four levels – zero per cent, 5 per cent, 12 per c
ent and 25 per cent.
The South Asian Free Trade Area (SAFTA) came into force on 1 January 2006. The T
ariff Liberation Programme (TLP) commenced on 1 July 2006 with a road map for ta
riff reduction in a phased manner such as by non- LDCs to LDCs (December 2008),
non-LDCs to non-LDCs (December 2014) and LDCs to all contracting States (Decemb
er 2015).
Import duty on textile machinery, most spares and accessories, dyes and
chemicals, and raw cotton have been reduced to zero.
Child labour in the T&C industry has been eradicated.
Various compliance issues are gradually being addressed by manufacturers and exp
orters of T&C products.
Social accountability and labour safeguard measures are gradually being develope
d.
Sanitary and phytosanitary measures are being developed.

Further, Bangladesh generally follows internationally recognized labelling. In t

his regard, the Product Labelling Policy, 2006 was adopted by the Government of
Bangladesh. Recognized ISO standards are being developed and implemented. To ens
ure marketing of quality products of standard specification, the registration an
d prior approval of labels for certain products of T&C have been made compulsory
. Imports of T&C products are open, but it requires registration from Chief Cont
roller of Import and Export in order to keep track of the importers as well as v
olume of imports of different products. To be granted import registration the fo
llowing major documents are required:
A trade licence;
Membership Certificate from a Chamber of Commerce or related trade association;
Tax identification number;
Bank Solvency Certificate.
In addition, conformity with standard or technical regulation on T&C through lab
oratory tests by a conformity assessment body has been made essential for intern
ational trade. Bangladesh is trying to develop an internationally acceptable tes
ting laboratory for T&C products. The European Union and UNIDO are providing tec
hnical assistance in developing and setting up such a laboratory. In this regard
, the Government has already established the Bangladesh Accreditation Board and
has been trying to upgrade the level of international standards being followed a
nd to become a signatory of International Laboratory Accreditation Cooperation.
Policy support to meet post-MFA challenges
With the phasing out of MFA, trade in T&C is facing serious challenges from newl
y industrialized countries. Different competing countries are providing policy s
upport as well as financial support in order to increase the competitiveness of
their T&C industries. To compete on an equal footing, the Government of Banglade
sh has initiated programmes for not only developing and expanding the sector ove
rall, but also to increase competitiveness so that Bangladeshi entrepreneurs and
exporters will be able to compete with developing countries as well as with cou
ntries of Southeast Asia. Considering the importance of the primary textile sect
or in the national economy, in July 2005 the Government formed a high-level inte
r-ministerial taskforce, headed by a former Minister for Textiles and Jute, to a
ssess and evaluate the present status and make recommendations for the developme
nt and expansion of PTS. Following meetings with all stakeholders, the taskforce
report made 12 recommendations for implementation. The report was approved by t
he former Government.

The recommendations, which form the core policy guideline for overall developmen
t of the T&C sector for the next 10 years, are that:
The debt-equity ratio should be fixed at 70:30 or any other favourable rate;
The weaving and dyeing-finishing subsector should be given an extra boost and pr
iority while considering bank loans for investments;
The difference between export proceeds conversion be restricted within the maxim
um range of 50 paisa between the Bangladesh taka and the United States dollar;
Provision be made for bank loans at a lower rate of interest. The interest on in
vestments in the textile sector should be fixed at 9 per cent, both by nationali
zed and private sector banks. At present, nationalized banks are lending at 9 pe
r cent while private sector banks charge 14 per cent;
In considering textiles as a “thrust sector”, all imported spares and all imported
yes, chemicals and sizing materials used in the textile sector be made duty-free
and tax-free;
The rate of cash assistance in lieu of duty drawbacks and bond facilities be inc
reased to 10 per cent;
In order to meet the scarcity of technical personnel in the textile sector, more
technical and vocational technical institutes be set up, and the status of the
Bangladesh College of Textile Technology be upgraded to Textile University. In a
ddition, Textile Faculties should be established at all technical universities,
and all technical schools, colleges and vocational institutes should include tex
tiles as a subject in their curricula; A High-tech Park, Garment Villages, API a
nd EPZ with necessary infrastructural facilities for setting up textile industri
es should be established on a priority basis;
The tax holiday scheme be continued;
In order to protect the environment, the establishment of effluent treatment pla
nts should be encouraged by providing machinery and other equipment as well as s
pare parts on a duty-free basis;
A committee be set up with representatives from the Ministry of Local Government
, Ministry of Industry, Ministry of Textiles and Jute, Ministry of Commerce, the
Board of Investment, various local authority bodies and the Bangladesh Textile
Manufacturers Association for clustering industrial regions;
In considering the textile sector as a “thrust sector”, the electricity, gas, cost,
freight and insurance sectors be left out of the VAT net.
Once the recommendations have been implemented (in phases, if necessary, the
textile industry will be able to become sustainable, develop, expand and play it
s role in
the economic development of Bangladesh.
www.unescap.org/tid/publication/tipub2500_pt2chap1.pdf
QUOTA HIGHLIGHTS
• According to WTO agreement, quotas are phased out and import tariffs are reduced
in the major importing markets of textile items from Bangladesh. From the year
2005, all quota restrictions are eliminated and tariffs are
reduced to minimum limits.
• Bangladesh enjoys duty free access to EU, Canada, Japan, Argentina, Mexico and B
razil, if the fabric and the garment is produced (2 stages) in the country. Unde
r this facility, almost all knitwear and most of the woven wear items are export
ed to these countries duty free

TEXTILE ECONOMY
• Bangladesh is the unbeatable global supplier for basic and semi basic knit and w
oven wear, due to its strength of low cost labor and GSP/LDC facilities
• Textile sector is considered as Thrust Sector by the Government, giving
special incentives to entrepreneurs, which in turn has augmented the overall inc
rease of production capacity and diversification of product mix.
• Competitive wage rate together with easily trainable workforce, entrepreneurial
skill, expanding supply side capacity, and government policy support helped to t
ranslate the comparative advantages into competitive advantages.
• The core strength of the industry low cost labor and the backward linkage. The e
ntrepreneurs of the sector not only increased their stitching capacity overtime
but also invested in the allied industry to augment the overall capacity of the
total sector with the same pace. Over the period of time knitwear and denim have
gradually become almost self sufficient in fabric and yarn. This improvement ha
s become possible because of the integrated growth of spinning and denim fabric
factories in line of the growth of country s stitching capacity and increased ne
ed of the yarn and fabric.
www.cherryfieldsesby.com/docs/pdf/Bangladesh.pdf

Export Control in Bangladesh

1. Introduction: Bangladesh emerged as an independent country in 1971. She enter
ed into International Trade actively since 1972. In the early years of independe
nce the gap between Import and Export was very wide. This gap started to decreas
e from 1980s when Bangladesh adopted liberal trade policy consistent with the em
erging trend of the market economy. Extensive reform programs have been implemen
ted in trade regimes during the last two decades. The prime objective of the tra
de policy of Bangladesh is to strengthen the economy. For achieving this objecti
ve Bangladesh has adopted export-based development strategy. As export sector is
the main sources of hard-earned foreign
currency of Bangladesh, Government has taken all the initiatives for overall dev
elopment of the sector.
2. Export Policy: For export promotion and development Bangladesh has been pursu
ing periodic Export Policy from 1980. In the first half of 80s she pursued one-
year export policies in the first half of 80s and two-year policies in the last
half of the same decades. Since then five- year export policies were formulated
and implemented. After the expiry of the tenure of five-year policy government a
nnounced three –year Export Policy. On going Export Policy is for the period 2003-
2009. These policies are consistent with the agreement under Uruguay Round Accor
d, WTO and the principles of market economy. These are also maintaining favorabl
e balance between exports and imports of the country.
3. Export basket: In the export basket of Bangladesh there are primary commoditi
es and industrial goods. Frozen food, tea, agricultural product, raw jute, etc.
are the primary product for export. On the other-hand, readymade garments (Oven
garments and knitwear), leather, jute goods, fertilizer, and chemical products,
footwear, ceramics product, engineering products, petroleum by-products and hand
icrafts are the major industrial export goods. The product-wise export earnings
from major exports are shown
Import Policy
Government is sincerely committed to fostering a gradual development of free mar
ket economy in the light of GATT agreement. In the interest of export promotion
& investment in the country it is necessary to have a long term, stable, faculta
tive & liberal Import Policy. With this and in view the present democratic gover
nment has taken steps to extend the duration of the Import Policy from two years
to five years. Efforts have been made to make the Import Policy easier and more
liberal by relaxing or rescinding the regulatory provisions of the previous Imp
ort Policy. Provisions have already been made to allow import of capital machine
ry and industrial raw materials on consignment basis without the cover of the Le
tter of Credit. Government has taken steps for quality control in the import of
cement, fertilizer etc. In order to protect the interest of the consumers. Steps
are afoot to ensure that in future all imported consumer items conform to a spe
cified standard of quality. In the present Import Policy Order second hand/recon
ditioned machinery are importable subject to fulfillment of certain conditions.
Gradually efforts will be made to classify those machinery under H.S. Code.
Export Policy
Acceleration of production and expansion of trade result in growth of national w
ealth. Increased production in export sectors may become the prime mover in the
development cycle in a densely populate of Bangladesh like our as this will gene
rate employment opportunities which in turn will generate savings and investment
on consequent flow of capital. The prime national objective of poverty alleviat
ion will thus be materialised. As a first step towards reaching this goal we nee
d to look at the country s production infrastructure.
Export trade is featured by the dominance of a few commodities in a narrow marke
t. Such dependence on at limited number of export items targeted a limited marke
t is not desirable for economic development. We must, therefore, aim both at pro
duct and market diversification or else our export trade will become stagnant i
n the near future.
Export trade must keep pace with the projected GDP growth @ 7% and make due cont
ribution through increased export earning. In this exercise it is imperative to
identify new thrust sectors, increased export of higher value added items, diver
sify product wise , ensure products quality, improve packaging, attain efficient
productivity. We should aim at marketing quality products at competitive price
at the correct time.
1.4.. The Export Policy 1997-2002 has been designed to operate in the imperative
s and opportunities of the market economy with a view to maximizing export growt
h and narrowing down the gap between import payment and export earning.

DENIM PRICES
Bangladesh is a major exporter of denim jeans to EU27. Being low priced and with
special and indefinite duty free and quota free access under ‘Everything but arms’
initiative to EU , Bangladesh continues to dominate the EU denim import busines
s. Currently, it has about 19% share of the denim jeans import market in EU27 co
untries.
Lets have a look at the figures of imports of denim jeans from Bangladesh for th
e last 10 years .
Year Total Denim Jeans (million pcs) Value (million Euros) Average Price
(Euro/pc CIF)
2000 16.46 87.92 5.34
2001 25.50 120.26 4.72
2002 32.69 144.69 4.43
2003 48.50 190.87 3.94
2004 63.71 247.52 3.88
2005 63.29 245.42 3.88
2006 85.07 341.78 4.02
2007 74.57 289.98 3.89
2008 81.94 317.23 3.87
2009 89.68 373.93 4.17

Thus we can see that the exports of denim jeans have increased by almost 400% f
rom 2000 to 2009 . There have been some years in which the exports increased by
a large % as compared to the previous year . These years have been :
2001 : Increase 54%
2002 : Increase 28%
2003 : Increase 48%
2004 : Increase 31%
2006 : Increase 34%
2009 : Increase 10%
The prices from Bangladesh have been more or less moving in a narrow range of Eu
ro 3.8 to 4.20 since 2003. Though in earlier years, the prices were much higher,
but recent years have seen the prices move around in this range. There is no cl
ear trend in the prices from Bangladesh if we consider these figures. However, w
ould it be the similar situation if the Euro prices were converted to dollar pri
ces . In the table below, we have taken the average conversion factor (from Euro
to USD) for each year from 2000 to 2009 and applied the factor to the average p
rices for that year. This gives us the average dollar prices for export of denim
jeans from Bangladesh to Eu . With this table we will come to know whether ther
e is really no trend for prices from Bangladesh:
Year Euro To USD
average factor Av Price (Euro) Av. Price (USD)
2000 1.09 5.34 4.89
2001 1.12 4.72 4.21
2002 1.06 4.43 4.18
2003 0.89 3.94 4.42
2004 0.80 3.88 4.85
2005 0.80 3.88 4.85
2006 0.80 4.02 5.02
2007 0.73 3.89 5.32
2008 0.68 3.87 5.69
2009 0.72 4.17 5.79
In the table and chart above, we can see that actually the prices from Banglades
h are quite different than what Euro prices show. We can see that since 2002 the
average prices in Euro terms (from 2002 to 2009) have declined by more than 5%
whereas there is an uptrend in dollar terms and the prices have increased from $
4.43 per piece in 2002 to $ 5.79 in 2009 – actually showing an increase of about 3
0%
Dollar being the ruling currency worldwide, gives a better picture of the prevai
ling price situation and it clearly reflects that the prices from Bangladesh are
continuously and steadily rising over the years. This is despite the fact that
the volumes have increased manifold during this period. The Bangaldesh denim exp
ort industry is only expected to grow stronger in the coming times . We have see
n a number of denim mills also come up in Bangladesh and this strengthens the su
pply chain making it easier for Bangaldesh to go deeper into these markets.

June 3rd, 2010 by Sandeep Agarwal www.denimsandjeans.com/...denim.../denim.../ba

ngladesh-export-of-denim-jeans-to-eu-2005-2009/

OTHER RECOMMENDATION FOR DENIM EXPORT

World Denim Market
The world denim market is likely to grow continously for the next few years . Ho
wever, supply is growing at a faster pace.
World Jeans Market- 51.6$ Billion in 2007
Expected to become 56.2$ billion by 2014
Global demand growing at 5%, supply at 8%
Global Denim fabric production in 2006- 2.7 billion mtrs.
Over 50 percent of denim production is based in Asia with China, India, Turkey,
Pakistan and Bangladesh.
Between EU, US and China, 70% of world jeans consumption.
Estimated Share of Jeans Purchase By Region
North America : 39%
Western Europe : 20%
Japan & Korea : 10%
Rest of the world : 31%
No. Of Denim Mills Worldwide
Region No. Of Denim Mills
Asia(China) 297
Asia(Other countries) 104
North America 9
Europe 41
Latin America 46
Africa 15
Australia 1
Total Denim Mills (World) 513
Forecasts For Denim Market – 2010
In volume terms:
The developed world will not grow at all, remaining at 1240 million units of je
ans.
The rest of the world will grow by 13 per cent to 783 million units.
In total this means that world volume growth will be 4.8 per cent, delivering 20
24 million units.
In Value terms:
Value growth is effectively zero. In the short term the world market will grow b
y 1.5 percent in volume and will fall by 3 per cent in value in long term. This
is because of :continuing downwards price pressure from retailers in USA and Eur
ope, elimination of tariff and quota barriers to low cost imports from the devel
oping world Overcapacity Global installed capacity of denim.

BIBLIOGRAPHY
en.wikipedia.org/wiki/Denim
ezinearticles.com/?Textile-Industry-in-India&id=373841
 business.mapsofindia.com › India Industry
www.denimsandjeans.com/...denim.../denim.../world-denim-market-a-report-on-capac
itiesmarket-size-forecasts-etc/
ezinearticles.com/?India-Among-Top-Jeanswear-Marke
www.fabrics-manufacturers.com › http://exim.indiamart.com/product-classification/h
s-code-textile-articles.html
www.fibre2fashion.com/news/textile-news/newsdetails - July 26, 2010 (India)
Published on: June 29, 2010 at 19:10 www.commodityonline.com
www.unescap.org/tid/publication/tipub2500_pt2chap1.pdf
www.cherryfieldsesby.com/docs/pdf/Bangladesh.pdf
June 3rd, 2010 by Sandeep Agarwal www.denimsandjeans.com/...denim.../denim.../ba
ngladesh-export-of-denim-jeans-to-eu-2005-2009/