Monthly export of readymade clothes may rise by $250 mn amid B'desh crisis

Bangladesh's readymade garment exports have already declined by 17 per cent in the first quarter of the current fiscal year compared to the same period last year, a report claimed

India can be a beneficiary in the international readymade garment markets as Bangladesh, the world's second-largest exporter in the sector, grapples with economic challenges, amid ongoing political unrest there, according to a report released on Thursday.

India could gain monthly export orders worth USD 200-250 million in the short term, a CareEdge study said.

While Bangladesh has historically captured a significant portion of China's declining share in global readymade garment (RMG) exports, India has been unable to fully capitalise on the opportunity, it said.

However, the current situation in Bangladesh presents a golden chance for the Indian RMG sector to expand its footprint both in short and medium terms, the report said.

 

"If the unrest in Bangladesh persists for an extended period, it could result in a significant shift in export orders towards India. Industry estimates suggest India could gain monthly export orders worth USD 200-250 million in the short term and around USD 300-350 million in the medium term," the rating agency said in its observation.

Large-scale readymade garment manufacturers with operational efficiency and backward integration are expected to be the biggest winners as global brands seek reliable and efficient suppliers, the report said.

Bangladesh's readymade garment exports have already declined by 17 per cent in the first quarter of the current fiscal year compared to the same period last year, it claimed.

India, on the other hand, has registered a 4 per cent growth in such exports during the same period.

Bangladesh witnessed some market share erosion in the first quarter of the current fiscal, especially due to the impact of socio-political disturbances and inadequate forex availability, the report said.

This benefited India by "narrowing down the ratio of RMG exports of Bangladesh to that of India from around 3.2x in FY24 to 2.5x in Q1FY'25", the report noted.

In Q1FY'25, Bangladesh's readymade garments exports were USD 9.7 billion, while India's exports were USD 3.9 billion.

"The recent budget announcement on skilling programmes and the potential Free Trade Agreements with the UK and the EU will further strengthen India's position in the global RMG market," said Krunal Modi, Director at CareEdge Ratings.