India utilizes Bangladesh’s low-cost production capacity placing many orders come from other nations
The local exporters are tapping the duty-free market access
It is said that the next business of Bangladesh will take place in Asian markets. Major big economies in Asia are India, Japan and China are making Bangladesh their sourcing destination for garment items.
Garment export to all the three major Asian destinations are on the rise because of price competitiveness and the rise of middle-income people in the three markets.
For instance, garment shipment to India, a market of more than $50 billion in readymade garment (RMG) items is rising significantly from Bangladesh.
Garment export to India has been growing as the rising middle-income people of India are preferring the Bangladeshi-made garment items because of competitive price and for retail business by the Western clothing retailers and brands in Indian markets.
Many people of the Indian middle class cannot afford the Indian high-end garment items and they prefer Bangladeshi-made garment items.
Many international retailers and brands that operate the clothing retail business in Indian markets, outsource apparel items from Bangladesh.
As a result, garment shipment to India has been rising significantly.
Data shows strong export sign
In the July-December period of the current fiscal year, Bangladesh exported garment items worth $365.95 million up 58.07 percent of $231.53 million in the same period of the last fiscal year, according to data from the Export Promotion Bureau (EPB).
Of the total amount of the last six months, some $161.69 million came from the knitwear shipment, up 66.46 percent at $97.13 million in the same period of the last fiscal year.
Similarly, the woven garment shipment also rose by 52% to reach $204.26million in the July-December of the current fiscal year compared to $134.38million in the corresponding period of the last fiscal year, the data also said.
Even in the time of severe fallouts of the Covid-19, the export of garment items maintained strong to India. In fiscal 2020-21, Bangladesh exported garment items worth 421.86 million to India which was $420.73 million in fiscal 2019-20.
In fiscal 2018-19, Bangladesh exported garment items worth $499.09 million, the data also said. India has its major retail brands like Reliance, Timberland and Aditya Birla and others. Almost all of those Indian brands outsource garment items from Bangladesh.
What buyers say?
“Some major Indian brands have been sourcing garment items from Bangladesh directly over the last many years. This is one of the major reasons for a significant rise in garment export to India,” said a senior official of the Bangladeshi garment buying house which exports 10 percent of its over $300.0million garment items to India in a year.
Even some Indian entrepreneurs produce apparel items in Bangladesh and ship those goods to India for local markets, the official said asking not to be named.
The shorter lead time is also a major cause for increasing garment items to India from Bangladesh, he said. Usually, it takes between 35 days and 40 days to export goods from Chattogram port to European ports, but the export of India is just crossing the border and it takes only two or three days, exporters said.
Moreover, export to India is possible in multi-model transport modes like railways, trucks and ocean-going ships due to geographical proximity.
With taking the business opportunities, more than 500 local garment factories including the major companies, are involved in the export of apparel items to India.
The competitive price of locally produced garment items is also another reason for the higher shipment of garments to India, the official also said.
Bangladeshi garment items also enjoy zero-duty benefits to Indian markets under the South Asia Free Trade Agreement (SAFTA), he said.
What exporters say
Many Indian factories are hiring Bangladeshi sub-contractors to produce many orders placed by Dubai and other countries’ buyers.
Md. Shahidullah Azim, Managing Director of Classic Fashions Ltd said his company sends nearly $3.0million worth of garment items to a Dubai company but through Indian exporters as the Indian exporters re-export to Dubai but made in Bangladesh.
Azim said a lot of such Indian businessmen have been placing a good number of work orders in Bangladesh to send other countries.
This is one of the major reasons for increasing garment export to India, he added.
Md. Shahidul Islam, Managing Director of Rupa Knitwear (Pvt.) Ltd said he sends more than one lakh pieces of sweaters from his factory in a year.
He said the Indian market is very potential for the local garment manufacturers and exporters although there are some trade non-tariff barriers like testing facilities in the bordering areas.
If the testing facility is smoothened the garment export will grow a lot to India, he said. However, soon Indian markets will be a major export destination for Bangladeshi apparel exporters, he added.
Sharif Zahir, Managing Director of Ananta Group said annually his group sends $10.0million worth of garment items mainly denim, ladies underwear, bras, woven shirts and knitwear items to Indian markets in a year.
He also said India is a potential market for Bangladesh as the export is growing every year from his factory. The local manufacturers have been enjoying the Indian zero-duty benefit on garment shipment to India, he also said.
At the same time, India is also a major source of fabrics, yarn and textile chemicals for Bangladesh as India is the second-largest import destination for Bangladesh after China.
What BGMEA president says
Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) also echoed the views of both Islam and Zahir.
“Yes, India is a very potential market for us. Garment export to India will grow more soon. We do not consider India as our competitor but a good friendly country for sourcing a major portion of raw materials like cotton, yarn, fabrics and textile chemicals,” said Hassan.
The business relationship between Bangladesh and India has improved to a new height as both countries have been working to remove the trade barriers between the two countries, he said.
“We will send a business delegation to India in April this year to discuss business and Investment in Bangladesh by the Indian entrepreneurs. Exchange of such delegations will strengthen the trade ties of Bangladesh with India further,” Hassan also said.
Moreover, the members of the BGMEA will participate in a trade show for three nations in Bangalore of India in June this year, he said.
Bangladesh, Myanmar and Vietnam will participate in the trade fair to showcase their garment items of their respective countries, he added. Hassan also said the state-owned Export Promotion Bureau will facilitate the local companies to participate in the Bangalore trade fair.
Hassan also said that if the trade facilities along with the bordering areas of both countries like improving infrastructures, banks and testing facilities, the export to India from Bangladesh grow a lot.