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Informist, Tuesday, Aug 6, 2024

 

By Krity Ambey

 

NEW DELHI – India's garment exports are unlikely to see a significant increase on account of political turmoil in Bangladesh, experts said. The political instability may not last for long, and if it does prolong, the textile business of countries such as Vietnam, Cambodia, and Ethiopia are set to benefit more than India.

 

Bangladesh is the second-largest garment exporter in the world after China. The recent political developments in Dhaka are said to adversely impact the garment business there, which accounts for 85% of Bangladesh's total goods exports.

 

Bangladesh's former prime minister Sheikh Hasina resigned and fled the country on Monday due to nation-wide anti-government protests, which had turned violent. Currently, the Army has taken responsibility of maintaining law and order in Bangladesh. Garment factories in the country have also been closed indefinitely.

 

Amidst the upheaval, Bangladesh will safeguard its garment industry as it has a contribution of about 20% in the country's GDP, Global Trade Research Initiative founder Ajay Srivastava said. Even if the business there unfortunately gets disrupted, the Indian garment sector lacks the scale to replace Bangladesh in the supply chain, Srivastava added.

 

"Whereas Bangladeshi garment industries have 5,000 power looms in a unit, Indian industries have 500 power looms in a unit," Srivastava said. "Bangladesh garment exports, at $50 bln, are more than three times higher than India's garment exports." 

 

India's garment exports have fallen every year in the last 10 years. India exported garments worth $15 bln in 2023-24 (Apr-Mar), which is 3.4% of the nation's total merchandise exports in the year.  

 

On account of the current uncertainties, Indian garment and leather companies that have operations in Chennai as well as Chittagong are getting requests from buyers to complete the order from India, the Federation of Indian Export Organisations Chief Executive Officer Ajay Sahai said. "But we are not expecting too many orders to flow to India. It is only those companies that have operations in India as well as Bangladesh."

 

"As of now, the situation is fluid in Bangladesh, but we are hopeful that normalcy will soon be restored and business will continue as usual," Sahai said. 

 

Besides this, if the uncertainties remain, advanced economies may choose Cambodia and Ethiopia over India as the other two are in the least-developed countries list of the United Nations, Srivastava said. The World Trade Organization encourages developed countries to give duty-free preference to imports from the least-developed countries. Bangladesh is also in the least-developed countries list. 

 

"There is tariff benefit for least-developed countries in Europe," Sahai said. However, the US does not give tariff benefits to the least-developed countries, Sahai added. The European Union is the top importer of garments in the world, followed by the US. The EU has a share of about 27% in the total garment imports, followed by the US with a share of 26%.  End

 

US$1 = 83.95 rupees

 

Edited by Aditya Sakorkar

 

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