Though at present, these are short-term orders aimed at fulfilling the anticipated rise in demand during the upcoming festive season, many feel the gains for India could well be permanent if the political uncertainty continues in the neighbouring country.

Besides frequent strikes and chaos, which had stalled production in Bangladesh's US$ 45 billion garment export industry, continued tension in industrial areas as demonstrators attacked factories and looted godowns, have brought in a new element of uncertainty.

The resultant order diversions to India could bring much-needed relief to the country’s export sector, especially with outbound merchandise shipment contracting by more one per cent year-on-year in July to US $33.98 billion compared to an expansion of 2.5 per cent in June 2024.

India's textile and apparel industry is one of the biggest in the world, accounting for a 4-6 per cent share of the total global clothing exports. However, Bangladesh and Vietnam -  besides China and the European Union - have a larger share of the world market. While China accounts for about 30 per cent of the total market share, Bangladesh enjoyed about 6-8 per cent of the market before the chaos.

“The order sizes are small as these are very specifically meant for this festive season, nonetheless these orders could keep coming provided our exporters can meet the demand and maintain quality,” Ajay Sahai, director general and CEO, Federation of Indian Export Organisations (FIEO) told The Secretariat.

Political Uncertainty In Bangladesh Continues

Bangladesh's exports dropped 4.34 per cent in FY24 owing to lower shipment of ready-made garments (RMG), indicating larger challenges in the economy.

Quoting Khandoker Rafiqul Islam, newly elected president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Apparel Resources, a platform providing news and analysis of the apparel, fashion, and textile sectors pointed out that exports to both Europe and the US from Dhaka have shrunk.

Buyers who typically place orders during July and August have refrained from doing so due to “the political changeover stemming from a recent mass uprising.”

One of the first things that Bangladesh’s chief adviser Muhammad Yunus did after taking charge of the South Asian nation following former prime minister Sheikh Hasina’s ouster was to meet the country’s garment manufacturers and exporters, the principal industry in that nation.  

However, his assurances of protecting the sector have not borne fruit, and a number of garment factories owned by Awami League leaders and by traders from Shia Islamic sects have faced arson attacks.

Analysts with India's Commerce Ministry said that if the political situation does not improve in Bangladesh, the country could lose large orders permanently.

“If the situation does not change for the better, many international buyers will switch to other sources. Buyers look for stability in the political climate -- how fast can the country normalise its political situation is the question,” the economist attached to the Ministry of Commerce and Industry said.

India’sTextile & Apparel Sector

India’s textile and apparel industry, one of the largest employment generators, accounts for about 5 per cent of the country’s GDP. Though the government has taken several steps to promote the industry including the production-linked incentive (PLI) scheme, and the setting up of PM Mega Integrated Textile Region and Apparel (PM Mitra) among others, challenges remain.

Higher production costs, labour, and environmental issues are some of the key challenges. That apart, the uncertainty in the global economy poses a serious risk to the sector. The need of the hour for the government is to address these challenges not only to support export growth but also to generate large-scale employment.  

As Indian factories gain temporarily from the turmoil in Bangladesh, they also need to learn and understand how Dhaka carved out a thriving garment industry that managed to beat the traditional big players in the textile sector, to remain in the game.