Monthly exports of ready-made garments could rise by $250 million amid B’desh crisis
India stands to benefit from the global ready-made garment market as Bangladesh, the world’s second-largest exporter in the sector, grapples with economic challenges and ongoing political unrest, a report released on Thursday showed.
A CareEdge study suggests that India could generate monthly export orders worth USD 200-250 million in the short term.
While Bangladesh has historically captured a significant portion of China’s declining share of global ready-made garment (RMG) exports, India has failed to fully capitalise on this opportunity, the report said.
However, the current situation in Bangladesh offers a golden opportunity for the Indian ready-made garment sector to expand its presence in both the short and medium term, the report said.
“If the unrest in Bangladesh continues for a longer period, it could result in a significant shift of export orders towards India. As per industry estimates, India could get monthly export orders worth USD 200-250 million in the short term and around USD 300-350 million in the medium term,” the rating agency said in its observation.
According to the report, large-scale ready-made garment manufacturers with operational efficiency and backward integration are expected to be the biggest winners as global brands look for reliable and efficient suppliers.
According to the company, exports of ready-made garments from Bangladesh have already fallen by 17 percent in the first quarter of the current fiscal year compared to the same period last year.
India, on the other hand, has registered a 4 percent growth in such exports during the same period.
The report shows that Bangladesh has faced a decline in market share in the first quarter of the current fiscal year, mainly due to socio-political unrest and insufficient availability of foreign exchange.
India benefited from this as “the ratio of Bangladesh’s RMG exports to India was reduced from around 3.2x in FY2024 to 2.5x in Q1 FY2025,” the report said.
In the first quarter of fiscal year 2025, Bangladesh’s ready-made garment exports amounted to $9.7 billion, while India’s exports amounted to $3.9 billion.
“The recent budget announcement for training programmes and the possible free trade agreements with the UK and the EU will further strengthen India’s position in the global ready-to-wear market,” said Krunal Modi, Director, CareEdge Ratings.
(Only the headline and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First publication: Aug 09, 2024 | 02:41 AM IST