Bangladesh crisis could boost India's ready-made garment exports: CareEdge

The Indian credit rating agency said this could create export opportunities worth $200-250 million a month for India's RMG sector in the near term, potentially rising to $300-350 million in the medium term.

There's precedent for such a shift. When China's share of global ready-made garment exports started declining in 2015, countries such as Bangladesh and Vietnam captured a significant portion of the market. India, however, missed the opportunity to capitalise on China's shrinking dominance in the sector.

The report said, “The sociopolitical uncertainties in Bangladesh may prompt global RMG brands and retailers to diversify their sourcing, especially if the crisis persists for more than a quarter."

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"India is poised to benefit from this shift, potentially capturing 6-8% of Bangladesh's monthly export orders in the near term and about 10% in the medium term," it said. “With available capacities, India has the potential to increase RMG exports by 20-25%."

China still dominates

Global ready-made garment trade was valued at $550 billion in 2023. Despite its declining share, China continues to dominate this market, accounting for more than 30% of exports.

Bangladesh holds the second position with around an 8.5% market share in 2023. The country’s share in global RMG trade increased consistently from 2015 to 2023, largely at the expense of China. India remains a distant seventh, with a market share of 3-4% over this period.

With ‘China plus one’ sourcing strategies in place, global RMG brands and retailers have only a few alternatives to Bangladesh, such as as India, Vietnam, and Cambodia.

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India is in prime position to capitalise on this opportunity as it boasts a complete textile value chain from fibre to garments, unlike Bangladesh, which relies heavily on imported yarn and fabric.

Government initiatives such as the PM Mega Integrated Textile Region and Apparel (PM MITRA) scheme, a production-linked incentive (PLI) scheme, and free trade agreements (FTAs) with key export markets could further enhance India's textile export capabilities.

Gap with Bangladesh narrowing

According to commerce ministry data, India’s ready-made garment exports grew in FY22 and FY23 after dipping during the pandemic. However, these exports declined in FY24 as global brands and retailers liquidated excess inventories and delayed purchases amid high inflation and rising interest rates in Europe and the US.

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Data from the Bangladesh Garment Manufacturers and Exporters Association showed that Bangladesh's RMG exports were 3.2 times those of India in FY24. But this narrowed to around 2.5 times in Q1FY25, indicating that India was gaining a larger share of the market at Bangladesh's expense.

The CareEdge report said, “This shift was not only due to sociopolitical upheaval in Bangladesh but also supported by various initiatives aimed at enhancing the competitiveness of Indian RMG exports."

Large Indian companies that export ready-made garments include Shahi Exports, Gokaldas Exports, SCM Garments, Richa Global, KPR Mill, Eastman Exports Global Clothing, and Richaco Exports.