With the crisis in Bangladesh intensifying, the textile sector that contributes to the lion’s share of its exports is likely to be the first casualty, with international buyers shifting their focus to alternate markets like India. India is expected to gain an additional business of $300-400 million per month if around 10-11 per cent of the neighbouring country’s exports are diverted to Indian hubs like Tiruppur, say industry experts.
Bangladesh’s monthly run rate of apparel exports is in the range of $3.5 to $3.8 billion and has a high double-digit share in the European Union and the UK markets and a 10 per cent market share in the United States market. On the other hand, India is exporting in the range of around $1.3 to $1.5 billion per month. “This is unfortunate and if the current disruption extends for a longer period, it will affect buyer sentiment. As an initial reaction, buyers will likely shift some orders to India and other countries. India’s monthly run rate of apparel exports is in the range of $1.3 to $1.5 billion, and we have the capacity to handle an additional $300 to $400 million in orders immediately,” said Prabhu Damodaran, Secretary of the Indian Texpreneurs Federation, an industry body. The crisis is coming at a time when Bangladesh was expected to cross the $50 billion mark in annual exports in 2024, compared to around $47 billion in 2023.
In addition to this, manufacturing units owned by Indians in Bangladesh are also likely to shift their base to India. According to trade policy analyst S. Chandrasekaran, around 25 per cent of the units in Bangladesh are owned by Indians, which include companies like Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing. “It is a chaotic situation. 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, as orders will get diverted,” Chandrasekaran added. “The sudden drop in global volume may get compensated by a rise in Indian exports,” he added.
Tiruppur, which is likely to be a major gainer if the crisis persists for a longer period, expects a rise of 10 per cent in its business during the current financial year. “We expect that orders may start coming to Tiruppur, and during the current financial year, it is expected to be at least 10 per cent higher than last year because of the current crisis in that country,” said K. M. Subramanian, President of the Tiruppur Exporters’ Association. On Monday, Bangladesh Prime Minister Sheikh Hasina succumbed to the protest and tendered her resignation on August 5, 2024. She has reportedly reached India.
Normalcy in Bangladesh is crucial from an export point of view as well. “Bangladesh’s recovery also plays a crucial role in parts of the value chain in India, such as yarn and fabrics. Bangladesh is one of the major buyers of Indian cotton yarn, purchasing about 30 to 35 million kilograms per month. Their dependence on Indian yarn will continue, and once the market reopens, the demand for yarn will be significant to make up for the shortfall and the loss in the utilization of local spinning mills,” said Damodaran. According to reports, domestic apparel players, including Pantaloons, are also importing a considerable share of their products from Bangladesh. “Indian retailers also import ready-made garments from Bangladesh, and we expect a sharp drop in such imports for this festive season, which will benefit domestic manufacturing units,” he added.
First Published: Aug 05 2024 | 7:24 PM IST
