Bangladesh has seen a 22.31-percent year-on-year decline in garment exports to India during the first nine months of the current fiscal year, data shows, despite an increase in shipments to other non-traditional markets.
Exporters point at shrinking demand in India and the growing influence of the “self-reliant India” campaign for the fall. They also cite challenges at home such as rising production costs due to energy price hikes, inconsistent gas supply and recent wage increases, which are eroding competitiveness.
According to them, India data reflect the real scenario of Bangladesh’s overall export performance.
Bangladesh’s readymade garment (RMG) exports to India fetched $645.18 million between July and March of the 2023-24 fiscal year, compared to the $830.51 million earned during the same period in the previous year, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The decline affected both knit and woven garments.
During the period, knit item exports fell by 25.90 per cent to $267.01 million, while woven garment exports dropped by 19.57 per cent to $378.17 million.
While exports to India declined, local apparel-makers saw an increase in shipments to other major non-traditional markets such as Japan, Australia, Russia, Korea, China and the UAE. Export growth to the markets ranges from 6.0 per cent to 59 per cent.
However, exports to Mexico experienced a slight decline of around 2.0 per cent, reaching $258.57 million, data shows.
Fazlee Shamim Ehsan, proprietor of Fatullah Apparels Limited, said India has been expanding its domestic garment production capacity to meet both internal and external demand.
Delhi is providing policy support to businesses, such as those in Gujarat, which have increased fabric production capacity over the years.
In contrast, apparel manufacturers in Bangladesh face rising production costs due to increasing gas and electricity prices, along with recent wage hikes.
These factors, according to Mr Ehsan, are impacting the country’s competitiveness in the global garment market.
Besides, he also alleged that exporters are facing customs-related harassment that affects the overall exports.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Financial Express that gas shortages limit their ability to operate at full capacity.
He said that they could not accept all the work orders as buyers offered low prices, often below the production costs.
Demand for apparel items declined across major traditional destinations like the US, EU, and UK, Mr Hatem said.
Exporters said India’s data reflect the “true scenario” of the industry. Many factories could not utilise half their capacity due to a lack of work orders.
Although exports to India have declined recently, Bangladesh achieved the billion-dollar export milestone to the neighbouring country in FY 2022-23. According to BGMEA data, local RMG exports to India reached a record high of $1.01 billion, registering a 41.58 per cent year-on-year increase.
Bangladesh’s overall exports to India in the same fiscal year stood at $2.13 billion, according to the Export Promotion Bureau.
On the other hand, imports from India stood at $9.49 billion in the fiscal year of 2022-23, according to the central bank, in a yawning trade gap with the big economy.