Government incentives boost India’s yarn exports to Bangladesh

India's generous export incentive schemes are giving domestic yarn exporters a definitive price advantage of around $0.30 per kg over Bangladeshi producers. The price of local 30-count yarn is currently around $3.00 per kg, while comparable Indian yarn is being sold for just $2.70. For factory owners, this $0.30 per kg saving is crucial to their thin profit margins. This economic reality has led to a dramatic shift in purchasing patterns: garment makers who once relied entirely on domestic mills are now importing the vast majority of their yarn from India.

The price disparity is largely a matter of policy imbalance. Indian exporters receive extra cash benefits through multiple incentive schemes, such as the Remission of Duties and Taxes on Exported Products (RoDTEP), along with electricity, capital, and worker subsidies.

Conversely, support for Bangladeshi producers has been severely curtailed. Cash incentives for local textile exporters have been slashed from 4 per cent to a mere 1 per cent, while their own production costs - driven by higher utility bills and financing expenses - continue to climb.

Garment makers point out, India is actively rewarding its exporters, while Bangladesh has simultaneously reduced incentives for the domestic consumption of local yarn, leaving its own textile mills unable to compete on price in their home market.