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South Asian apparel markets remain untapped

Exporters need to develop customized products to cash the opportunities 

Garment manufacturers of Bangladesh are focusing on two major scopes to increase their export volumes and achieve sustainable profit to uplift their export earnings to $100 billion by 2030. They are targeting Asian markets and mounting the production of non-cotton apparel items.

Figure 1: South Asian nations reached a new high in the fiscal year of 2021-22 and it reached $2.28 billion riding on the Indian imports of $1.99 billion. 

73 per cent of Bangladesh’s garment are being exported to nine countries — the US, Germany, the UK, Spain, France, Italy, the Netherlands, Canada, and Belgium. Lack of market diversification contributed to create such situation.

After an initial assessment the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is concentrating on the Asian markets as a major destination alongside the existing top three destinations e.g. the European Union, the US, and Canada.

In this article we will try to find out the scopes remaining in the south Asian markets for Bangladesh garments exporters. The country’s apparel exports to South Asian countries rose sharply by 68.93 per cent to $735 million in the last fiscal year. However, the figure is still below the billion dollar mark and it is very smaller than the potentials.

South Asian countries housed a lion share of the global population but the exports of Bangladesh to the region are still untapped. According to the Export Promotion Bureau (EPB) data, the country’s exports to South Asian nations reached a new high in the fiscal year of 2021-22 and it reached $2.28 billion riding on the Indian imports of $1.99 billion. However, the apparel exports stood at $735 million, which was $434 million in the FY21.

Of the total exports earned from South Asian nations, India is the largest contributor, which imported products worth $715 million, which was $422 in the previous year.

Zero-duty benefits for Bangladeshi goods acted as catalysts behind the sharp growth in the Indian market.

South asian market
Figure 2: The Product basket needed to emphasize along with the regular items for grabbing the South Asian market.

Exports to South Asian Countries

After India, Sri Lanka imported the second highest apparel goods of $10.77 million followed by Pakistan $3.81 million, Nepal $2.66 million, Bhutan $1.12 million, Maldives $657446, Myanmar $459581 and Afghanistan $125488.

What stakeholders say

Though the growth rate is very high, the figure is not as much as the opportunity the region offered for Bangladesh, said economists and exporters.

“It is a good sign for Bangladesh that exports to the neighboring countries are growing but the concern is that we are yet to tap the opportunity to its fullest,” former lead economist Dr. Zahid Husain said.

“We are mainly doing better in the Indian market. It is because of duty free market access and gradual improvement in connectivity through land ports,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) vice president Shahidullah Azim said.

But gradually we are entering into the market of the region. It will take a little bit of time to grab the full-fledged opportunities, said the business leader.

South Asian market is very crucial for Bangladesh

As of FY22, Bangladesh’s 50.22% or $21.40 billion exports earnings from the RMG sector came from the EU market and 21.15% or $9 billion from the US market.

It means 71.37 per cent exports earnings are concentrated here, which needs to diversify to reduce dependency.

“India alone has a population of 140 crore and if Bangladesh can grab a small share of that market, it will help to increase exports and reduce dependence on other markets,” said Ahsan H Mansur, Executive Director of Policy Research Institute.

The Indian market is growing very fast because global retailers are opening their outlets in India, he adds.

On the other hand, Nepal, Sri Lanka can be another option for Bangladesh as the export earnings are still very small. IN addition, Pakistan is another market where there are also opportunities, said the economist.

Now, garment manufacturers send inner garments, denim and casual knitwear products apart from other consumer goods.

How to grow

“The export growth was good news for Bangladesh but the country still had more potential to expand its shipments to the neighboring countries,” said Khondaker Golam Moazzem, Research Director of Centre for Policy Dialogue (CPD).

We should focus more on the Indian market as the global buyers are opening outlets there. Exporters have to establish connections with the new buyers doing business there, said Moazzem.

In boosting regional trade, governments should concentrate on bilateral factors rather than multilateral or regional initiatives. If we can establish trade relations separately with all the regional countries it will help to increase bilateral trade, he added.

Bangladesh should work to expedite the SAARC motor vehicles agreement (MVA), BBIN, SATA negotiations. If it is done this will make the trade more easier, said the economist.

South Asian
Figure 3: South Asian market for Bangladesh apparel exporters.

He also stressed on removing non-tariff and para-tariff barriers with the neighboring countries to boost apparel exports.

On top of that Bangladesh has another advantage to attract buyers from the South Asian countries as it offers quality products at a reasonable price.

“Across the globe Bangladesh is well known for its quality but affordable products. We also ensure timely delivery of goods even amid severe crises,” said BGMEA President Faruque Hassan said.

Resultantly, demand for Bangladeshi goods increased in the region gradually and we are receiving new buyers, said Hassan.

Currently, of the total garment items shipped from Bangladesh, 74 per cent are made cotton fibre whereas 78 per cent of apparel products sold globally are manufactured using non-cotton items. As a result, Bangladesh is being deprived of better prices.

BGMEA has put an emphasis on the $224.4 billion global technical textile market, which includes products like personal protection equipment, hospital bed sheets, uniforms of nurses, and isolation sheets.

Bangladesh will not get the LDC-linked duty preference in the EU, the largest trade bloc for Bangladesh, following the nation’s graduation from the group of the least-developed countries in 2026 as one of the major challenges that could stand in the way of the $100 billion export target.

What the exporters need right now is to focus on making customized goods for the region as there are differences among the countries in terms of dress pattern, said the BGMEA President.

I think, only by grabbing the Indian market Bangladesh can earn billions of dollars as there is a huge population. But the government has to create an enabling environment to improve bilateral trade, said the business leader, also Managing Director of Giant Group.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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