Garment exports from Bangladesh to India rose 30.86 per cent year-on-year in fiscal 2015-16. India allows duty-free benefit to almost all Bangladeshi goods except 25 alcoholic and beverage items. However, there is a 12.5 per cent countervailing duty on apparels from Bangladesh. Garment exporters also face provincial taxes and non-tariff barriers in India.

Yet, garment exports from Bangladesh to India have been rising since last year thanks to western retail giants operating in India. US retail giant Walmart and Swedish retailer H&M have opened stores in India in the last few years. Also many Indian companies that have retail chains in India have tied up with foreign retailers to grab the market. Foreign retailers buy a lot of garment items from Bangladesh for Indian customers, especially for the rising middle class.

Knitwear from Bangladesh is popular in India because of low prices and good quality. Garment makers in Bangladesh are offered a stimulus package for exporting to new destinations like India, Japan and China. In fiscal 2015-16, Bangladesh exported goods worth $689.82 million to India, which is 30.82 per cent higher than the previous year. The amounts were $527.16 million in 2014-15 and $456.63 million in 2013-14.