Finepoint | How India Is Gaining Big Amid Bangladesh’s Textile Trouble
International apparel brands, worried about supply chain disruptions, are pulling their orders from Bangladesh’s RMG sector and turning to India instead
Bangladesh’s economy is in deep trouble. Just look at Chattogram. It’s not just home to the country’s second-largest city and the vital Chittagong port—it’s also a powerhouse for Bangladesh’s economy. But right now, Chattogram is caught in a storm of violence and political chaos. Here’s what’s happening: minorities are under attack, with the Hindu religious movement ISKCON being one of the recent targets. This unrest is scaring off businesses, and Chattogram—a hub for the textile industry with over 700 garment factories employing hundreds of thousands—is feeling the heat. And it’s not just Chattogram.
related stories
Dhaka, the capital, is dealing with its own crisis. Workers are out in the streets, protesting against low wages, and creating a labour shortage that’s hitting industries hard. And there’s one industry that’s at the core of this issue — Bangladesh’s textile industry—particularly, the ready-made garments or the RMG sector. Bangladesh is losing large orders to its competitors, and India is a major beneficiary here.
Political instability has disrupted manufacturing, causing delays in production and interrupting the supply of both raw materials and finished goods. International apparel brands, worried about supply chain disruptions, are pulling their orders from Bangladesh’s RMG sector and turning to India instead. European companies from Germany, the Netherlands, Poland, and Spain are already testing the waters. And the results are striking!
Export hubs like Tiruppur in Tamil Nadu, Ludhiana in Punjab, Surat in Gujarat, Jaipur in Rajasthan, and Noida in Uttar Pradesh are buzzing with new deals. The Tiruppur knitwear hub in particular is buzzing with new orders. Indian manufacturers are cashing in, securing millions of dollars in deals from top global brands. Leading players like Arvind Mills, KPR Mills, Jindal Worldwide, Vardhman Textiles, Welspun Living, Raymond, Bombay Dyeing, Nitin Spinners, and Indo Count Industries are seeing significant growth in orders.
With its stable production capacity and abundant labour force, India is proving to be the reliable alternative brands are looking for. Raymond, for instance, has experienced a surge in demand thanks to its ability to offer competitive pricing and end-to-end solutions, from fabric production to garment exports. The company’s recent Rs 200 crore investment in expanding capacity has positioned it perfectly to capitalise on this opportunity.
India’s advantage lies in its workforce. India’s 18-35 age group, a massive demographic of around half a billion people, is larger than Bangladesh’s entire population. Another edge lies in its robust fabric supply chain, unlike Bangladesh, which primarily focuses on garment manufacturing and imports raw material like cotton from the likes of India.
But this is bad news for Dhaka and a terrible time to be distracted by religious extremism and political retribution for its leadership. Bangladesh is the second-largest readymade garment exporter in the world, with China being in the top spot. In 2024, it exported $38 billion worth of apparel-wear. Today, Bangladesh’s RMG sector is losing orders to its competitors, with India being a key beneficiary. It’s important to note that the RMG sector forms 15 per cent of Bangladesh’s GDP. But to really get a whiff of how destabilising such a trend can be for the Bangladeshi economy, get this: Readymade garments make up 80 per cent of its exports. That’s right. 80 per cent of Bangladesh’s entire export basket.
Since the ‘80s, the RMG sector has become a crucial part of Bangladesh’s economy, growing rapidly through each decade. This has brought a lot of money into the country, making it one of the fastest-growing economies in the world. But this success story has become one of over-dependence, and the lack of diversification is finally hurting.
In fact, Bangladesh’s RMG sector has been facing since the Covid pandemic. Rising inflation and forex crisis preceding Sheikh Hasina’s exit had already created troubled waters for the economy which was only exacerbated after the August coup. Now, Bangladesh is in talks with the IMF for $3 billion dollars in loans. It is also courting China for a bailout.
India and Bangladesh’s textile industries are deeply connected, each playing to its strengths. India handles the upstream work, supplying essentials like silk, cotton, yarn, and fabrics. Bangladesh takes it from there, focusing on making finished clothes and shipping them all over the world through India’s ports and airports. It’s a relationship that’s worked well for both sides for years.
However, the ongoing situation in Bangladesh has created an opportunity for competing nations across South and Southeast Asia, which is why India would be prudent in absorbing the increasing number of manufacturing orders as they come. It is being said that the industry could bring in an additional $2-3 billion dollars next year. Moreover, this shift also has the potential to push FTA talks with the UK and the European Union, which are home to many of these apparel brands. The challenge now would be to sustain this competitive edge in the long term.
But while shifts in business take place, these are mere symptoms of a bigger problem and that is political divide spilling onto the streets of Bangladesh. It is now on Chief Advisor Mohammad Yunus and his caretaker government to decide on the nation’s priorities going forward.
Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
- Location :
- First Published: