Bangladesh's ready-made garment (RMG) industry, a global powerhouse, continues its rapid expansion, leading to rise in raw material imports. Recent data from the Bangladesh Bank reveals a significant uptick in imports during the first four months of the fiscal year 2024-25 (July-October). Specifically, yarn imports jumped 25.8 per cent, while textile and related articles saw a 26.9 per cent increase compared to the same period in the previous fiscal. This rise underscores the growing demand for raw materials to sustain the nation's growing apparel production.

A lucrative opportunity for India

Bangladesh’s yarn imports went up from $968.7 million (July-October '23-24) to $1218.8 million (July-October '24-25), a rise of almost 25.8. Textile & articles thereof increased from $2363.8 million (July-October '23-24) to $2998.4 million (July-October '24-25), a 26.9 per cent rise. Raw cotton imports also saw a significant increase, rising by 15.4 per cent to $1258.8 million in the same period. Overall RMG raw material imports reached $7.92 billion in the first half of FY '24, highlighting the scale of the industry's material needs.

Table: Bangladesh's textile import landscape (July-October)

Source: Bangladesh Bank

The rise in demand creates a significant opportunity for India, a major supplier of raw materials to Bangladesh's RMG sector. India's proximity, established trade relations, and competitive pricing make it a preferred source for raw cotton, yarn, and fabrics. As Bangladesh's RMG industry grows, India's exports of raw materials are expected to rise further. This symbiotic relationship benefits both nations, with Bangladesh securing essential inputs for its leading export sector and India boosting its export revenue and strengthening regional trade ties.

There are several factors driving Bangladesh's import growth. The primary driver is the increasing demand for Bangladeshi garments in global markets. This has led to an expansion of production capacity as investment in new factories and is growing. Bangladesh is also moving towards producing higher-value apparel items, requiring a wider variety of raw materials. While India is a key supplier, Bangladesh also heavily relies on China, importing approximately $10 billion worth of fabrics annually. This reliance highlights the potential for India to further increase its market share.

Indeed India has maintained a strong position in cotton and yarn exports to Bangladesh. There has been steady increase in the exports of raw cotton and yarn to Bangladesh from India. However, India faces competition from other countries, including China and Vietnam, in fabric exports.

Meanwhile, China is known to be a dominant supplier of fabrics to Bangladesh, especially synthetic and blended fabrics. As per Bangladesh Bank the country imported $10 billion worth fabrics from China. China's strength lies in its large-scale production and competitive pricing, especially for synthetic and blended fabrics. What’s more China's supply chain integration and efficiency give it an edge in fabric exports.

India’s focus to increase market share

Indian trade bodies are actively strategizing and implementing steps to grow India's share in exports, particularly in the textile sector and to countries like Bangladesh. Here are some major initiatives:

Focus on value addition and diversification: Trade bodies like TEXPROCIL and AEPC are encouraging manufacturers to move towards higher-value products, including technical textiles, specialty yarns, and innovative fabrics. This helps India compete beyond basic commodities. They are also promoting diversification of export destinations to reduce reliance on specific markets and mitigate risks.

Strengthening supply chains and infrastructure: Meanwhile the focus is on addressing logistical bottlenecks, including port congestion and inland transportation which is crucial. Initiatives are being taken to improve infrastructure and streamline trade processes. Schemes like the Mega Integrated Textile Region and Apparel (MITRA) parks aim to create world-class infrastructure for textile manufacturing, attracting investment and boosting production.

Promoting trade facilitation and ease of doing business: Trade bodies are working with the government to simplify export procedures, reduce compliance burdens, and improve the ease of doing business. Also, India is actively pursuing free trade agreements (FTAs) and preferential trade agreements (PTAs) with key trading partners to gain market access and reduce tariffs.

Enhancing quality and sustainability: Promoting adherence to international quality standards and certifications is essential for gaining buyer confidence. Emphasizing sustainable textile production, including eco-friendly processes and responsible sourcing, is becoming increasingly important to meet global demand.

Active participation in trade fairs and exhibitions: Trade bodies organize and participate in international trade fairs and exhibitions to showcase Indian textile products and connect with potential buyers. Facilitating buyer-seller meets and business delegations helps create direct linkages between Indian exporters and international buyers.

Government support and schemes: The PLI scheme for textiles provides incentives to boost domestic manufacturing and attract investment in key segments. Similarly, the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme provides refunds of embedded taxes and duties, making Indian exports more competitive.

Specific initiatives related to Bangladesh: Border trade facilitation which involves improving infrastructure and procedures for cross-border trade with Bangladesh is a priority. Maintaining and strengthening India's position as a leading supplier of cotton and yarn to Bangladesh is a key objective. Trade bodies are exploring strategies to increase India's share in the fabric market in Bangladesh, particularly in specialized and value-added fabrics.