Will Indian textile industry benefit from Bangladesh turmoil?

Bangladesh, which has been witnessing a political crisis, is known for its textile sector. The country earns a large share of its income from exports of clothes and the ongoing unrest is expected to hit them hard.

With the world keeping a close eye on rapid developments in Bangladesh, international buyers, especially textile importers, are shifting their focus to alternative markets including India.

Bangladesh is a key market for Indian textiles and serves both as a manufacturing hub and a significant export destination.

The monthly apparel export of Bangladesh is $3.5-3.8 billion and has a high double-digit share in the European Union and the United Kingdom and a 10 per cent market share in the United States.

India, meanwhile, is exporting in the range of $1.3-1.5 billion per month.

A report by Business Standard quoted industry experts as saying that if 10 to 11 per cent of Bangladesh’s export is diverted to Indian hubs like Triuppur, India’s gain will be an additional business of $300-400 million per month.

“We expect orders may start coming to Tiruppur, and this financial year, they are expected to be at least 10 per cent more than last year’s,” the report quoted KM Subramanian, president of the Tiruppur Exporters’ Association, as saying.

“This is unfortunate and if the current disruption lasts long, it will affect buyer sentiment. Initially, buyers will likely shift some orders to India and other countries. We have the capacity to handle an additional $300-400 million in orders immediately,” Prabhu Damodaran, secretary to the Indian Texpreneurs Federation, an industry body, was quoted as saying by Business Standard.

The protests and upheaval in Bangladesh have come at a time when the country was expected to surpass $50 billion in annual exports in 2024, compared to around $47 billion in 2023.

Textile manufacturing units shifting base to India

The report further said that manufacturing units owned by Indians in Bangladesh are also likely to shift their base to India.

There are nearly 25 per cent of the units in Bangladesh that are owned by India. These include companies like Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing, trade-policy analyst S Chandrasekaran said.

“The movement of consignments is stuck, and there is a breakdown in the supply chain for the upcoming Christmas season. India has an advantage here because orders will be diverted,” Chandrasekaran said.

“The sudden drop in global volumes may be compensated by a rise in Indian exports,” he further said.

Bangladesh has been witnessing its worst political crisis since independence in 1971, with Sheikh Hasina resigning from the post of Prime Minister amid massive anti-government protests.

Bangladesh Army Chief General Waqar-uz-Zaman, on August 5, announced that an interim government would be taking over the responsibilities.