August 9, 2024
2 mins read

B’desh Unrest Could Benefit India’s Exports

In the global RMG trade ($550 billion in 2023), Bangladesh occupied the second position with around 8.5 per cent market share…reports Asian Lite News

If the political unrest prolong in Bangladesh, nearly 10 per cent of the neighbouring country’s readymade garment (RMG) export orders could shift, presenting a $200-250 million monthly export opportunity for India’s RMG sector in the near term and $300-350 million in the medium term, a report said on Thursday.

India has enough headroom to increase RMG exports by 20-25 per cent given the available capacities in the sector, according to a CareEdge Ratings report.

“In case of sustenance of the socio-political disturbance for more than one or two quarters, Bangladesh exporters would face difficulty in ensuring on-time delivery to its customers. In such a situation, India is expected to gain monthly export orders of $200-250 million in the near term,” said Akshay Morbiya, Assistant Director at CareEdge Ratings.

As global RMG brands and retailers are relatively stickier with their sourcing partners, a large part of this market share loss could be permanent and lead to a gain in monthly export orders of around $300-350 million in the medium term,” Morbiya mentioned.

In the global RMG trade ($550 billion in 2023), Bangladesh occupied the second position with around 8.5 per cent market share.

Bangladesh’s share in global RMG trade has consistently increased, largely at the expense of China. Meanwhile, India remains at the seventh spot in terms of global RMG trade with a market share of around 3-4 per cent.

According to the report, countries such as Bangladesh and Vietnam captured a large part of China’s declining share in the global RMG exports in the past.

“Recent political upheavals and social unrest in Bangladesh, which is the second largest exporter of RMG after China, present an opportunity for the Indian RMG sector,” the report mentioned.

In FY24, Bangladesh’s RMG exports were around 3.2 times of Indian RMG exports. However, during the April-June quarter of FY25, this ratio narrowed down to around 2.5 times, “reflecting India eating into the share of Bangladesh”.

“Apart from the impact of socio-political upheavals in Bangladesh, this was also aided by various initiatives to enhance the competitiveness of Indian RMG exports,” the report findings showed.

“With the China+1 sourcing strategy already in the works, global RMG brands and retailers have limited alternatives such as India, Vietnam and Cambodia to replace Bangladesh. India is in a prime position to capitalise on the opportunity,” said CareEdge Ratings.

India has its presence across the textile value chain from fibre to garment, unlike Bangladesh which is largely dependent on the import of yarn and fabric.

Furthermore, various government initiatives such as PM Mega Integrated Textile Region and Apparel (PM MITRA) park, Production Linked Incentive (PLI) scheme, and free trade agreements (FTAs) with key export markets, are designed to enhance textile exports.

These factors collectively position India as a strong alternative for global brands seeking reliable garment supplies.

Indian entities with substantial capacities are likely to benefit the most, as they can manage large single orders from global brands.

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