Someone's loss is someone's gain

Instability is the biggest enemy to the business

The recent unrest & political instability in Bangladesh presents out of the way India a chance to capture a larger market share in the global textile and apparel industry (T&C) as companies look to relocate production.

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Reports were to be believed orders worth billions from major buyers in Europe and the US are already being re-directed to Indian textile firms. Many Indian textile suppliers of cotton yarn and fabrics to Bangladesh agree, Indian textile sector in this transitory phase is affected seriously by the crisis.

Make no mistake that as a ballpark around 25 per cent of Bangladesh’s manufacturing facilities are owned by Indian companies in some or the other way, and both Indian and foreign firms operating there face concerns over production delays and market shortages and security threats. This has caused exaceberations amongst global brands to re-evaluate their supply chains.

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Putting it in context," The world’s third-largest clothing exporter in 2022, Bangladesh is over-dependent on its textile and garment industries (T&A), which perpetually make up whopping 92 per cent of its merchandise exports.

However, recent floods and power shortages have added woes to the worsening production challenges factories are grappling with, prompting global buyers to explore alternative hubs if the situation does not normalise in the coming weeks.

It is immediately reflecting that frontline Indian garment export centers like Tirupur, Ludhiana, Surat, Jaipur, and Noida etc are emerging fortunately as promising alternatives. Companies like Arvind Mills and Raymond are among the potential beneficiaries looking to grab the opportunity with both hands.

Raymond CMD Gautam said earlier reacting to this event," Today, the ball has been thrown, we have to catch it,”

Geopolitics is a reality and is here to stay

Philosphically presently India is favourable to western world where most of the textile consumption happens and friend-shoring should support the case.

In the interim, India’s RMG sector is likely to gain from both domestic demand standpoint and surge in exports, considering Western retailers restock and supply chains diversify and derisk in some sense under the China+1 strategy/Europe plus one as a foundational thesis.

Good news is Indian RMG exports to the US have grown, with the country accounting for nearly 60 per cent of India’s textile exports. Rising wages in Bangladesh and its upcoming likely loss of Least Developed Country (LDC) status in 2026 further has the potential of positioning India as a competitive credible-alternative hopefully supporting India to catch the bus this time around elusive to it all this while.

No running away from the challenges; However, India faces challenges, such as outdated labor laws and high logistics costs which still is a reality despite of significant improvement in physical infrastructure all around India.

Saddening to note as reported by a recent study mentioning that India’s textile exports have declined by 7.87 per cent over the past five years.

The one of the ways to beat the heat can be by seizing this opportunity thrown, India must align its product offerings improving value proposition with global needs, negotiate trade agreements with key markets, and improve its infrastructure further and positive timely policy interventions backed up by structural trade reforms.

Bear in mind, experts are increasingly of the view that it can be an incremental business at the max for Indian textiles given Bangladesh industry preparedness and robust ecosystem it has built around this industry through the years and Bangladesh industry is not ready to give any width whatsoever.

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