"Bangladesh aims to invest $25 million in India to directly reach out to end consumers, which is expected to boost sales to $1 billion from the present $300 million over the next three years. There is a considerable demand for RMG products made in Bangladesh such as trousers, shirts, blouses, skirts, kidswear, cotton nightwear and jeans."

India and Bangladesh are competitors in apparel exports but at the same time trade is improving between these nations as rising number of Indian manufacturer-exporters are looking at setting up factories in Bangladesh. And Bangladesh on the other hand, Bangladesh is exploring the India as a potential growth market.

Trade improves but issues need resolution

Both countries are putting in efforts to improve ties. As Prime Minister Narendra Modi’s visited Bangladesh in June, he committed to look into the request for 50 acres of land either free of cost or at a nominal price in Gujarat to set up an apparel warehouse and Bangladeshi retail stores in the state. Bangladesh aims to invest $25 million in India to directly reach out to end consumers, which is expected to boost sales to $1 billion from the present $300 million over the next three years. There is a considerable demand for RMG products made in Bangladesh such as trousers, shirts, blouses, skirts, kidswear, cotton nightwear and jeans.

However, there are certain issues that the country is concerned about while doing business with Indian retailers. One is devaluation of the rupee against the dollar and second is non-payment of dues by the Indian retailers. For example, since 2011, a total of 22 small and medium exporters of Bangladesh supplied garment products worth $5 million to Lilliput India. However the company could not pay its dues. Another Indian retailer, Aldi too is yet to pay $1.2 million against export proceeds of the Bangladeshi exporters for the last couple of months.

According to the Export Promotion Bureau, Bangladesh, RMG export earnings from India in the first month of the FY 2015-16 decreased to $10.38 million from $14.28 million in the same month of the FY 2014-15 because of such concerns related to non-payment of dues.

Indian mills eye prospects in Bangladesh

Keeping the low labour costs and industry-friendly policies in Bangladesh in sight, Indian mills are planning to either establish their base in the country or provide better service to the growing garment manufacturing industry. Experts say the Bangladesh garment industry imports approximately 40 per cent of woven fabrics, which is expected to increase over the next five years. As of now, the largest portion of imported fabrics from India to Bangladesh is in denim fabric followed by shirting and suiting which includes non-denim bottom wear fabrics. Out of India’s 30 plus denim mills, the top 10 mills are exporting their denim fabric to Bangladesh.

However, there are problems like the trade policy between the two countries. While 48 types of textile products including finished garments from Bangladesh are being sold in India without any duty following the free-trade agreement signed between the two countries, yarn and fabrics exported from India attract duties in Bangladesh. This disparity will certainly affect the domestic garment producers/suppliers, as China too is using the trade route through Bangladesh to dump their products.

After China rolled back its cotton stockpiling policy it resulted in a decline of cotton imports. Indian cotton yarn exporters found Bangladesh as the next big market for exports. According to government estimates, lesser cotton imports by China may lead to as high as 41 per cent drop in shipments from India this year. India expects Bangladesh to increase cotton imports, which could beat the slump in Chinese imports. As of now, Bangladesh buys around 55-60 lakh bales from India.