Global textile orders could partly shift to India as the political turmoil in Bangladesh has brought economic activity in that country’s key sectors such as the garment industry to a standstill, Indian garment and apparel exporters said Tuesday. Given Bangladesh’s prominent position in the global clothing industry, the Indian apparel industry might have to step in, at least temporarily, to fill the gap for global buyers. This comes after the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), fearing vandalism, reportedly asked all factory owners to keep their units shut until further notice. Violence in Bangladesh has reportedly left at least 300 dead amid countrywide curfews and curbs on mobile internet. “India has no intention or inclination to exploit this unfortunate situation in our friendly neighbouring country. The Indian garment industry is making serious efforts to grow RMG (ready-made garment) exports on its own, based on its merit. However, it is quite likely that in the short-term garment orders may shift to India and the Indian apparel industry may be asked to fill the gap caused by this severe disruption,” said Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC). Ready-made garments represent more than 85 per cent of Bangladesh’s merchandise exports and over 70 per cent of its total exports. The expectations of a shift in orders to India comes as Dhaka has a bigger share in global trade of clothing at 7.9 per cent compared to New Delhi’s 3.2 per cent, according to the World Trade Statistical Review 2023. Bangladesh’s $45-billion clothing industry that employs over four million workers was already affected due to the weakening electricity generation infrastructure that was hit by higher input costs following the start of the Russia-Ukraine war and adverse weather events, as per S&P Global. A senior executive with a listed textile company said that Indian industry might not be able to fulfil orders that might shift from Bangladesh as the supply chain is already stressed to fulfil domestic orders. “If this situation keeps Bangladesh occupied for more than 6 months then there could be a lot of shifts to India. But Vietnam may benefit from this more than Indian garment manufacturers since the supply chain is already stressed to fulfil domestic orders. Workforce and production capacity isn't elastic that can be increased overnight. Moreover, Ahmedabad textile processing industry which manufactures huge fabric quantities is already shut due to pollution checks,” said the executive, who did not wish to be identified. The Confederation of Indian Textile Industry (CITI) said that several major global brands that rely on Bangladesh for their sourcing needs will also be affected by these disruptions and that brands with significant portions of their supply chain rooted in Bangladesh may experience delays and a decrease in the availability of their products. “This, in turn, could lead to a ripple effect across the global retail market, affecting inventory levels and sales,” CITI said. “The ongoing scenario in Bangladesh poses significant concerns for the Indian textile and apparel sector, particularly for companies operating factories in Bangladesh and exporting products from those units. Any supply disruption in Bangladesh will have immediate impacts on the supply chain, potentially affecting production schedules and delivery timelines,” CITI said. S&P Global Ratings in its ratings report on July 30 had said that Bangladesh’s economic growth continues to moderate following two years of fast expansion in 2021 and 2022. As high inflation, rising domestic interest rates, limited access to foreign exchange, and policies aimed at compressing imports continue to bite, domestic demand will likely remain modest in comparison to the long-term trend, the report said. “Modest per capita income, which we estimate at about US$2,600 in the fiscal year ended June 2024, remains one of Bangladesh's main rating constraints. But the country's strong underlying growth helps to mitigate this weakness. We calculate its 10-year weighted-average real per capita GDP growth rate at about 5.4 per cent. This is much stronger than the average for sovereigns at a similar level of income. We expect this long-term performance to remain largely intact, despite current policy headwinds,” the report said.
