Bangladesh Political Crisis Threatens Its Textile Industry; India Poised To Gains

 

Dhaka/New Delhi, August 8, 2024 - Bangladesh, renowned for its robust textile sector, is facing an unprecedented political crisis that threatens to disrupt its vital clothing export industry. The country's monthly apparel export, valued at $3.5-3.8 billion, constitutes a significant portion of its economy, with substantial shares in the European Union, the United Kingdom, and a 10% market share in the United States.

The ongoing political turmoil, marked by the resignation of Prime Minister Sheikh Hasina amid massive anti-government protests and the subsequent takeover by an interim government led by Army Chief General Waqar-uz-Zaman, has put the textile sector in jeopardy. This crisis comes at a time when Bangladesh was expected to surpass $50 billion in annual exports in 2024, up from around $47 billion in 2023.

Impact on the Global Textile Market

International buyers, particularly textile importers, are closely monitoring the situation and are beginning to shift their focus to alternative markets, including India. Bangladesh's key position as both a manufacturing hub and a significant export destination for Indian textiles is now under threat.

According to industry experts, if 10-11% of Bangladesh’s export is redirected to Indian hubs like Tiruppur, India stands to gain an additional $300-400 million in business per month.

“We expect orders may start coming to Tiruppur, and this financial year, they are expected to be at least 10 per cent more than last year’s,” said KM Subramanian, president of the Tiruppur Exporters’ Association. This sentiment is echoed by Prabhu Damodaran, secretary of the Indian Texpreneurs Federation, who noted, “We have the capacity to handle an additional $300-400 million in orders immediately.”

Shift in Manufacturing Units

The crisis in Bangladesh is also prompting manufacturing units owned by Indians to consider relocating to India. Nearly 25% of the textile units in Bangladesh are owned by Indian companies, including prominent names like Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing. Trade-policy analyst S Chandrasekaran highlighted the logistical challenges posed by the crisis, noting, “The movement of consignments is stuck, and there is a breakdown in the supply chain for the upcoming Christmas season. India has an advantage here because orders will be diverted.”

Benefits for Indian Cotton Growers

The potential increase in textile manufacturing and exports in India could significantly benefit Indian cotton growers. With the anticipated rise in demand for Indian textiles, the need for raw materials such as cotton will also increase. This surge could provide a much-needed boost to the Indian cotton industry, which has been grappling with fluctuating market conditions and competition from synthetic fibers.

Conclusion

As Bangladesh grapples with its worst political crisis since its independence in 1971, the ripple effects on the global textile market are becoming increasingly evident. While the immediate outlook for Bangladesh’s textile sector appears bleak, India is poised to capitalize on this disruption, bolstering its own textile industry and providing new opportunities for its cotton growers. The coming months will be crucial in determining the long-term impact of these developments on the global textile supply chain.­