India & Bangladesh: Collaboration of the Hour

The textile industry today has a mechanism of its own. It has its own components as well as stakeholders and the places where they have an impact. However, as the circumstances change, this ecosystem gradually evolves in order to regulate the economy and contribute to sustainability. This also means that collaborations among countries become a necessity and a way into the future. One such collaboration is between India & Bangladesh.

The Global RMG Industry

Globally, the RMG (Ready Made Garment) market primarily comprises the European Union (EU), the UK, Japan, the US, Canada as well as South Korea. These account for over 60% of the total global imports. On the other hand, South Asian countries are currently dominating the export market. Bangladesh stands at owning 6% of the global RMG share in the market with India playing a crucial role in ensuring its success.

Currently, about 80 per cent of exports and export fabric used for readymade garments are directed to the west. US and Europe are major markets that Bangladesh is targeting. However, due to rapidly changing geopolitical dynamics, many in the industry have voiced their opinion on establishing new markets.

 

The Sourcing Gap

Bangladesh, primarily is an RMG export based market, In fact, it is the second largest RMG Exporter in the world. The Textile Industry contributes to about 11% of the country’s GDP and over 81% to the country’s total exports. With over 35 years of manufacturing experience, it is an excellent market for Textile Mills and Raw Material Suppliers. However, there is a gap in the ready availability of raw materials.  

With this change in the Geo-Political situation, major world economies are shifting to alternative Sourcing in Textiles. This in turn generates demand for Fabrics, Fibres, Yarns, Trims etc in the neighbouring countries which specialize in the domain. Bangladesh’s RMG economy benefits from high labour productivity and scale economies. This is paving way for India’s collaborative efforts with Bangladesh. Our nation is ripe with adequate raw materials, low labour costs, a large labour force and favourable trade relations with its neighbours.

 

India-Bangladesh RMG Collaborative Efforts

As one of the largest RMG exporting countries in the world, with India being one of its major trading partners, the two countries have been in close touch in providing raw materials such as yarn, fabric, and dyes for the RMG industry, which is a significant contributor to Bangladesh’s economy. Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has set a goal to take RMG export to $100 billion. To achieve this goal, the RMG sector of Bangladesh needs reliable and quality Raw materials supply. The demand for man-made fiber-based garments is growing and India is a reliable source of man-made fiber-based fabrics and lots of specialty fashion fabrics. 

As Indian Textile Supply is deep & highly fragmented, BGMEA has collaborated with SOWTEX – Tech Aggregator B2B Sourcing platform for fashion & textile materials to fast track connection to right suppliers from India.  

BGMEA has been working with the Government agencies of Bangladesh and India to open up additional land ports and ease the congestion in Petrapole-Benapole border and better connectivity via train for smooth flow of raw materials from India to Bangladesh. The faster lead time and additional quality raw materials from a reliable source like India can help fulfill the demand for our buyers as well as grow the Bangladesh market in diversified product category areas. To this extent, Textile Sourcing Meet has been organised by Sowtex & BGMEA between representatives from India and Bangladesh. It provides an opportunity for them to connect, engage, and collaborate on the textile value chain between the two countries. Panel Interactions will include top delegates of Indian & Bangladesh Governments, BKGEA, BGEA, BGBA, BTMA, FBCCI, BKMEA & Embassy – Officials / Commerce Councilors as well as Supply Chain Stakeholders to fast-track the Textile Supply Chain. 

Discussions on RMG manufacturers & participating suppliers, trend forecasts, digital fashion and product development were held. Further, presentations on focused mills, Facilitation & Recognition, and product demonstrations were also recorded in TSM’22 and have been planned meticulously for 2023 as well.

The two countries have also signed trade agreements, including the South Asian Free Trade Area (SAFTA), to boost trade and economic cooperation. The two countries have collaborated on initiatives such as the Comprehensive Economic Partnership Agreement (CEPA) and the Cotton Development Programme, which aims to enhance cotton production in Bangladesh. 

The Collaboration in Numbers

In terms of RMG production, India and Bangladesh have been collaborating heavily since 2001. Textile exports from India including raw materials to Bangladesh have been on a 5-fold growth from 10 billion USD to over 52 billion USD. Bangladesh has gone on record to export RMGs worth $764 million to India in 2021 an increase of more than 25 per cent compared to the previous year. 

In order to foster RMG trade between the nations, the Indian Confederation of Textile Industry has requested Dhaka to abolish the custom tax on garment imports so that both nations can come together in synergy and displace Chinese monopoly by acquiring 35% of the global RMG trade in the world. This statistic is set to achieve in the next five years and has got a favourable response from our eastern neighbour. 

Like the government of Bangladesh, Indian counterparts have also implemented various initiatives which support the growth of the Indian fabrics and RMG industry, such as the implementation of the Technology Upgradation Fund Scheme (TUFS) and the recently launched Production Linked Incentive (PLI) scheme to promote domestic manufacturing and increase exports. 

The Indian government aims to take forward exports to over US$ 100 billion by the next decade to boost foreign exchange inflow and churn indigenous employment. To come at par with global standards and the labour ecosystem, various schemes have been initiated such as the Remission of Duties and Taxes on Exported Products (RoDTEP), Rebate of State and Central Taxes and Levies (RoSCTL), Production Linked Incentive (PLI) scheme, PM Mega Integrated Textile Region and Apparel (PM MITRA) park. 

 

Delegations and Conversations

Bangladesh Garment Manufacturers and Exporters Association (BGMEA’s) president Faruque Hassan went on record (in the Textile Sourcing Roadshows) to say that India and Bangladesh do not compete but rather complement each other in RMG production. New Delhi aids heavily in sourcing raw materials, technology and petrochemicals to Bangladesh, directly impacting the manufacturing numbers in Bangladesh. With the help of a steady supply from India, Bangladesh is exploring newer markets in the post-pandemic world. It has also started exporting designer goods with high quality to India itself. 

 

Seeing A Favourable Future

Bangladesh hosts over 4000 factories serving all major global fashion brands exporting to over 150 countries and doing all of this by importing Indian textile worth $2 billion. The latter is expected to rise to an added $3 billion in the coming 3 years. As the next sustainable goal, India and Bangladesh are coming together to plan green manufacturing. They aim to reduce their GHG emissions by 30% by the year 2030. 

India and Bangladesh are adopting variously sustainable including the use of organic and recycled fibres, implementation of water and energy conservation measures, promoting of circular economy practices such as recycling and upcycling, and improving working conditions and social standards in the textile industry. India is the largest producer of MMF (Man Made Fibre) and the 6th largest exporter of it. 

India and Bangladesh are in the top few countries in the list of countries producing maximum textiles abiding by the Global Organic Textile Standard. Globally, over 35% of textile is now following GOTS. Bangladesh is producing 73% (2411 production houses) of the global GOTS textile. India comes in the second position (adding over 1194 facilities which produce GOTS textile).

India and Bangladesh are expected to witness a hike in collaboration on the RMG front considering the countries mutually benefit. India benefits from exporting raw materials to Bangladesh and Bangladesh heavily profits from using its workforce employed in producing RMG. Over 5000 factories in Bangladesh have currently employed 3.6 million workers and rely heavily on India to maintain momentum. Bilateral agreements, such as the duty-free deal between India and Bangladesh further foster trade.