2024-08-15 16:40:17
The textile ministry has held preliminary discussions with industry players on the possible impact of the political crisis in Bangladesh on Indian garment and textile exports. Officials said the discussions focused on how Indian exporters could benefit from a possible ‘Bangladesh plus one’ scenario if foreign brands sourcing from the neighbouring country look for alternative sources.
- Also read: Bangladesh crisis drives up textile stocks in India
A source told businessline that during a meeting with Textiles Minister Rachna Shah on the situation in Bangladesh earlier this week, the biggest concern highlighted by the textile industry was how to expand production capacity to meet the additional demand.
“India may not immediately benefit from the production loss in Bangladesh due to the ongoing unrest as we do not have the capacity. Production cannot be increased that quickly. Only knitwear manufacturers, mainly in Tirupur, which produce on a piece-by-piece basis and compete directly with Bangladesh, may benefit to some extent. But the gains will be limited,” the source said.
Bangladesh’s garment industry is expected to export $47 billion in 2022-23, making the country the second-largest garment exporter after Vietnam. However, the country’s violent anti-government protests have led to factory closures and the garment industry has been hit hard. Tensions have further escalated after former Prime Minister Sheikh Hasina abdicated on August 5 and fled to India.
Sources noted that while things are returning to normal quickly, at least in big cities like Dhaka and Chittagong, after the interim government led by Nobel laureate Muhammad Yunus took power last week, it is believed that big brands may be reluctant to increase sourcing from Bangladesh, especially if there is a delay in returning to normalcy.
“US orders are likely to shift to Vietnam, Pakistan and Sri Lanka, while some orders may also shift to India,” said Mithileshwar Thakur, secretary general of the Apparel Export Promotion Council. “European orders undertaken by Bangladesh may shift to different places depending on the product as India currently does not have enough capacity. Premium denim may shift to Turkey or Portugal. Trousers, bottoms and suits for men and women may shift to countries such as Morocco, Romania and Bulgaria. Underwear may shift to Sri Lanka.”
Thakur said both Indian industry and the government needed to take steps to expand capacity. “Unless we take some drastic steps like adjusting policies and come up with some measures where producers get additional benefits to offset our cost disadvantage compared to our competitors, it will be very difficult to expand capacity,” he added.
Sources said the government hopes that the seven mega integrated textile and garment zones (PM MITRA) industrial parks being set up across the country with a total investment of Rs 44,450 crore will change this, but the industry is quick to point out that these parks will not be built immediately. “The industry has raised the issue of relaxing the fabric import policy, especially for MMF, to make imports from Bangladesh easier,” the source said.
They also discussed the need to expand production capacity by relocating factories to the hinterland where labor is plentiful, rather than waiting for labor to come to the factories.
“It is widely believed that while India cannot take advantage of the West’s ‘China plus one’ strategy which has gained momentum post the coronavirus outbreak, it needs to take advantage of ‘Bangladesh plus one’ if the situation arises. Otherwise, it will be yet another case of missed opportunity,” the source said.
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