With the crisis in Bangladesh intensifying, the textile sector, which contributes a lion’s share of its export, is likely to be a victim of the turmoil, with international buyers shifting their focus to alternative markets like India.

India’s gain will be an additional business of $300-400 million per month if 10-11 per cent of the neighbouring country’s export is diverted to Indian hubs like Tiruppur, say industry experts.

 

“We expect orders may start coming to Tiruppur, and this financial year, they are expected to be at least 10 per cent more than last year’s,” said K M Subramanian, president of the Tiruppur Exporters’ Association.

Bangladesh’s monthly apparel export is $3.5-3.8 billion and has a high double-digit share in the European Union and the United Kingdom and a 10 per cent market share in the United States.  

India is exporting in the range $1.3-1.5 billion per month. “This is unfortunate and if the current disruption lasts long, it will affect buyer sentiment. Initially, buyers will likely shift some orders to India and other countries. We have the capacity to handle an additional $300-400 million in orders immediately,” said Prabhu Damodaran, secretary to the Indian Texpreneurs Federation, an industry body.

The crisis has come at a time when Bangladesh was expected to cross $50 billion in annual export in 2024, compared to around $47 billion in 2023.

In addition to this, manufacturing units owned by Indians in Bangladesh are also likely to shift their base to India. According to trade-policy analyst S Chandrasekaran, around 25 per cent of the units in Bangladesh are owned by Indians. They include companies like Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing.

 

“The movement of consignments is stuck, and there is a breakdown in the supply chain for the upcoming Christmas season. India has an advantage here because orders will be diverted,” Chandrasekaran added. “The sudden drop in global volumes may be compensated by a rise in Indian exports.”

Published on: 5th August 2024

Source: Business Standard