During his visit to the National Institute of Fashion Technology in Chennai, Union Textile Minister, Giriraj Singh was asked by journalists whether India was gaining market share in the ready-made garments (RMG) space vacated by Bangladesh due to social and political disturbances in the country. Bangladesh is a major exporter of RMG, with exports over $50 billion, thrice as much as India.
The minister dismissed the question, saying he was not much concerned about Bangladesh, Vietnam, etc, and was interested in working towards raising the Indian textile sector (domestic and exports) from $176 billion today to $350 billion by 2030.
He said that while Bangladesh has just 45 lakh workers in the textile industry, India has a significantly larger workforce of 4.6 crore.
The minister brushing aside the ‘Bangladesh opportunity’ reflects India’s current inability to make use of the opportunity.
“We just don’t have the fabric capacity,” says Lalit Thukral, President, Noida Apparel Export Cluster. All of India’s existing fabric capacity is fully booked and the country is not able to meet the huge demand, both in terms of volume and tight delivery schedules, from buyers who have been traditionally buying from Bangladesh, Thukral told businessline.
“We have been able to take (only) a very small percentage of Bangladesh’s export markets,” Sanjay K Jain, Chairman of ICC National Expert Committee on Textiles, told businessline.
Thukral said that Bangladesh has a 12-14 per cent advantage over India due to free trade agreements and concessional import duties as it is classified as a ‘least developed country’. The country could double its garment exports to $50 billion in ten years, whereas India is still “stuck” in the $14-16 billion range.
One of the reasons why India found itself without enough physical capacity is because the Indian textile industry is mostly comprised of MSMEs. Thukral observed that the Indian industry is worth ₹160 lakh crore, of which the big companies account for ₹40,000 crore — the rest being MSMEs.
“This is the appropriate time for the government to support this labour-intensive sector through handholding, capacity augmentation, skilling and financial support to MSMEs,” says Mithileshwar Thakur, Secretary General, Apparel Export Promotion Council.
Realigning supply chain
In a press release, Thakur said, “This is the time when the supply chain is getting re-aligned due to the Bangladesh crisis and the global buyers are looking for an alternative to China,” noting that the RMG industry “is fast emerging as the preferred sourcing destination for big brands.” The council has requested the government for help in terms of providing ‘interest equalisation scheme’, at a rate of 5 per cent, “to offset the high cost of capital.”
Still, exporters are hopeful that in the years to come, they would get a share of Bangladesh’s market. Thukral observed that “once the trust is broken” it would be difficult for Bangladesh to take back its entire market. He said that the PM MITRA (Mega Integrated Textile Region and Apparel) Park scheme takes off, it would big help.
Sivaramakrishnan Ganapathi, Vice Chairman and MD of Gokaldas Exports, told businessline that the “unstable environment in Bangladesh” coupled with “concerns about a potential increase in tariffs under the new US government, would strengthen the sustained trend in exports.
(With inputs from Mithun Dasgupta in Kolkata and Aishwarya Narendra Kumar in Bengaluru)