18 May 2022
Bangladesh’s exports to the Indian market is expected to reach US $ 2 billion for the first time at the end of the current financial year as the demand for Bangladeshi products is increasing in the neighbouring country.
This was underlined by none other than the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
Meanwhile, latest data from Bangladesh’s Export Promotion Bureau (EPB) suggest India, as a single country, is now the seventh-largest export destination for Bangladesh — in just nine months of the current financial year (Bangladesh’s financial year starts on 1 July and ends on 30 June) — exports to India touched a record high of US $ 1.5 billion, which means India is now one of the top 10 export markets for Bangladesh.
Credit to a large extent, in this direction, should go to the country’s readymade garment sector, offerings from which have gained a strong foothold in India’s domestic market, which is expected to reach US$ 59.3 billion this year, only to grow and develop to emerge as the sixth-largest market globally.
“The Indian retail landscape is very exciting. Now with markets opening up in Tier-2 and Tier-3 cities, the growth is going to be even faster,” maintained Mohit Batra, Country Head, Bangladesh Liaison Office, Reliance Trends, speaking to Apparel Resources earlier.
According to data analysed by Team Apparel Resources (AR) from various sources, Bangladesh apparel imports to India in 2021 was US $ 473.53 million from what was US $ 299.42 million in 2020, registering 58.14 per cent increase even if in the first half of FY2022 (July-December period, Bangladesh), the country fetched US $ 366 million from apparel exports to India achieving 58 per cent Y-o-Y growth compared to the corresponding period of last FY.
It may be mentioned here Bangladesh’s exports to India for the first crossed the US $ 1 billion mark in 2019, with goods worth US $ 1.25 billion shipped to the neighbouring country, of which the apparel export value was US $ 499.09 million in 2018-19 fiscal, which was 79.09 per cent higher compared to US $ 278.67 million in the previous year.
Going by the existing export trend and couple more months remaining still in the current financial year (of Bangladesh), many felt crossing the US $ 2 billion export landmark is a foregone conclusion.
“Trade picking up within the region signals a tremendous potential for growth,” observed ex-BGMEA President Rubana Huq, adding, “India is a huge country and we can take advantage of their vast consumer class.”
As per latest data analysed by Team AR, the top product categories exported to India from Bangladesh are T-Shirts, Trousers, Men’s Shirts and Sweaters, which collectively account for over 73 per cent of Bangladesh’s total apparel export earnings from India.
The highest growth was recorded in T-shirt category, in which Bangladesh’s export to India valued US$ 62.59 million in the January-December period of 2021, registering 122.31 per cent increase from the corresponding period of 2020 (when the value of T-shirts exported from Bangladesh to India stood at US$ 29.48 million).
In Trousers category, Bangladesh earned US$ 171.01 million from exports to India in the January-December period of 2021 that was around 36 per cent of the country’s total export earnings from apparels in the said period.
The export value of trouserswas 45.58 per cent higher than the earning from the shipment of trousers to India in the corresponding period of 2020 even as Bangladesh shipped Men’s Shirts worth US$ 76.45 million to India in the period under consideration (January-December period of 2021) compared to what was US$ 52.83 million in the same period of 2020, registering 44.71 per cent increase.
Similarly, in the January-December period of 2021, Bangladesh exported sweaters worth US$ 37.34 billion to India, growing by 41.33 per cent from what was US$ 26.42 million in 2020.
“If the testing facility becomes smooth, garment exports to India will grow a lot,” said Managing Director of Rupa Knitwear (Pvt) Ltd., Md Shahidul Islam, who claims to export more than one lakh pieces of sweaters every year to India.
According to industry insiders and economists, there area host of reasons that are to be credited for the increasing trend of apparel exports to India.
Duty-free market access is a major reason!
India allowed duty-free import of apparels from Bangladesh under SAFTA (South Asian Free Trade Area) in 2006. Earlier, this facility was limited to 8 million pieces per annum even as the restriction was removed in 2010 following which imports from Bangladesh have been growing at a steady pace.
Geographical proximity and improved connectivity have also played their role in giving an impetus to apparel exports from Bangladesh.
In the age of fast fashion, lead time is a big determinant for business success. Add to this the transportation cost. Both these factors industry people say prompted brands and retailers operating in India to source more from Bangladesh.
“Transportation cost from Bangladesh is low, which encouraged importers to buy goods for both local brands as well as foreign brands,” added BGMEA Vice-President Sahidullah Azim even as Director of BGMEA & Envoy Group, Shehrin Salam Oishee on her part underlined, “In all aspects, India has a huge population and their buying capacity is commendable,” and went on to add, “keeping the geographical location in mind, our neighbour is probably one of the closest destinations for shipping. Considering all costs, it will not be wrong to say India will benefit from our products as a huge cost of freight compared to other exporting nations shall not be incurred in this case.”
Connectivity between the two countries set for further improvement on the back of a slew of initiatives taken by the respective Governments, exports from Bangladesh is now set to touch new high in the coming days, feel many.
“Garment export to India will grow more,” claimed BGMEA President Faruque Hassan.
If Bangladesh’s apparel export to India is growing steadily, raw materials imports from India, especially cotton, fabric and yarn have also increased, thanks to COVID-19!
The pandemic-induced supply chain disruptions and subsequent increase in shipping cost led Bangladesh to fall back on India for its raw material requirements even as China, once a major supplier of cotton yarns to Bangladesh, lost grounds in this regard to India.
As per the data analysed by Team AR from various sources, India exported US $ 1.72 billion worth of cotton yarn to Bangladesh in calendar year 2021 from that of US $ 657 million in 2020 and US $ 539 million in 2019.
As is reflected in the data, India’s export of cotton yarn to Bangladesh has increased by more than three times in two years, which is directly related to Bangladesh’s exponential increase in garment exports in 2021, for which they depended on Indian significantly.
Also to be considered in this regard is the reluctance of major fashion retailers, especially from USA and Europe, from using Xinjiang-based cotton, which are the major apparel export bastions for Bangladesh.
No wonder hence, from being the ninth largest export destination for India two years ago, Bangladesh moved five notches ahead last year and might end up being the fourth largest export destination for India as the neighbouring countries continue to leverage each others’ strength for mutual growth.