2021 was the year of revival of the consumer markets and the fashion industry also managed to stay positive after a setback witnessed in 2020. Bangladesh proved to be a dominant force in its RMG exports throughout the year – all thanks to the reviving consumer sentiments not just in its key export markets but also in non-traditional countries such as India that is rapidly becoming a major importer of ‘Made in Bangladesh’ apparel products.
Being one of the largest consumer markets in the world with US $ 88 billion worth of apparel retail market in 2022 as per Statista, India poses a great market for Bangladesh to tap. The buying of Indian buyers is increasing and this growth is reflected on its imports as, during 2021, the apparel imports of India were higher than 2020 figures. Bangladesh remained the preferred sourcing destination for India last year with over 40 per cent of the imported apparels coming from the neighbouring country.
Read the first part of this article here – Indian apparel retail poised for ascendancy amidst economic revival
Since Indian apparel buyers are staying away from the Chinese vendors due to the instability China is causing across supply chain, Bangladesh is leaving no stone unturned to create business opportunities for itself and the data endorses this fact. As per Ministry of Commerce and Industry, India imported US $ 1.16 billion worth of apparels during 2021, noting 30 per cent Y-o-Y growth and almost equalled the pre-pandemic import figures that valued US $ 1.17 billion in 2019.
When data was further analysed by Apparel Resources, it was found that the import from Bangladesh valued US $ 474.71 million – highest among all importing destinations – noting a massive increase of 58.54 per cent in 2021 over 2020 and 19.10 per cent over 2019.
What’s truly in favour of Bangladesh is the fact that, despite India remained almost on similar import values of 2019 in 2021, the imports from Bangladesh have surged. The neighbouring country has become preferred sourcing destination for Indian buyers, beating China that could ship just US $ 279.18 million worth of garments to India in 2021, declining by 7.48 per cent on yearly basis. (See Table 1)
Why is it important for Bangladesh to look at India as an important market?
In 2026, Bangladesh will graduate to the UN’s developing country bracket. All the trade concessions that Bangladesh is getting from the US, Europe and other countries will end in 2026 in a phased manner and it will need to explore new options. And, what is a better country than India where apparel retail landscape is promisingly changing, especially in Tier-2 and Tier-3 cities where young fashion consumers aren’t shying away from spending money on apparels and related products.
Fashion brands, both domestic and overseas, are also bridging the gap between fashion and consumers, especially post-Covid, given how social distancing has changed the entire equation and opened a window to disrupt existing buying patterns of the consumers. Brands are now bringing the products as close to the consumer as possible unlike before when the consumer used to come in the stores to buy the product. This disruption has nevertheless levelled the playing field between big and medium retail players to thrive on the same platform.
The huge population of 1.35 billion is also a factor for Bangladesh to consider. The domestic apparel manufacturing (organised) is estimated at US $ 30 billion in India which doesn’t suffice the need of the retail industry! This is why big brands like Reliance Retail, Aditya Birla and Arvind have turned to Bangladesh for their sourcing needs. Reliance Retail sourced nearly 6.50 million apparel products from Bangladesh in 2019 which, reportedly, increased to over 10 million pieces in 2021 and, seeing the massive rise of Reliance Retail after its recent expansion spree, it is safe to say that this number is continuing to grow. This is what makes Bangladesh’s apparel manufacturers look at India as an exciting market for them.
Strategic ties of India with Bangladesh, duty-free benefits, close proximity, logistics support and connectivity prove to be pivoting points…
In March ’22, Piyush Goyal again emphasised that India is keen to sign an FTA with Bangladesh as soon as possible, the talks of which were initiated last year in September. With a total trade volume of US $10 billion, Bangladesh is India’s biggest trading partner in South Asia, while India is Bangladesh’s second-largest trading partner after China. As both countries are finalising a Comprehensive Economic Partnership Agreement (CEPA) in weeks to come, it may be recalled here that Bangladesh’s exports to India have tripled over the past decade, indicating a fast-growing trade relationship.
According to data from the Ministry of Commerce and Industry, overall imports from Bangladesh stood at US $1.09 billion in 2020-21, which was just US $ 685 million in 2017-18. Meanwhile, Indian exports to Bangladesh hovered at around US $9 billion all these years and cotton remained one of the top product categories being shipped to neighbouring country.
The growth of Bangladesh’s apparel export to India is inevitable asIndia allowed duty-free import of apparels from Bangladesh under SAFTA back in 2006 and the limitation of 8 million pieces per annum was removed in 2010 following which imports from Bangladesh have been growing at a steady pace and this pace has escalated massively in pandemic era.
Bangladesh can also make the best use of geographical proximity and improved connectivity that are already playing their role in giving an impetus to apparel exports to India.
To further improve the connectivity, both the countries recently stressed on the importance of facilitating bilateral trade through railways and approved a Detailed Project Proposal (DPP) to develop a container handling facility at Sirajganj Bazar station.
For running freight trains between India-Bangladesh, 900 metre new siding line has also been constructed at Benapole that has further strengthened the connectivity between both countries.India ran special parcel train from Ambala Cant station to Beanpole that helped the yarns and fabrics exporters of Punjab to market their products beyond the country border.One special parcel train consisting of 20 parcel vans moved to Benapole in Bangladesh. Each VPU was loaded with 430 cartons, weighing around 23 tonnes. The cost per tonne for carrying by Special Parcel train was Rs. 5,491 and which is very cheap and economical as compared to road transport which is much higher. Bangladesh should look at running these kind of trains to India carrying apparels that will further reduce logistics cost.
Top 5 apparel products imported by Indian buyers from Bangladesh in 2021…
The data clearly tells that the growth of Indian imports from Bangladesh has come majorly due to rising demand of knitwear products, while woven products, except some, are collectively still reigning the tally. (See Table 2)
As per data, men’s woven trousers remained the first choice of the Indian buyers in their buying patterns from Bangladesh with import values of US $ 154.60 million in 2021, noting 56.38 per cent Y-o-Y growth. The men’s trouser market in India is estimated at nearly US $ 5 billion, as per Technopak.
The second top product category imported from Bangladesh by India is knitted T-Shirt, the import of which valued US $ 63.37 million (up 114.89 per cent on Y-o-Y) in 2021. As believed by the industry, the most of the domestic demand is sufficed by the domestic players as India itself is a supreme producer of T-shirts with hubs like Tirupur dedicated to knitted T-shirt manufacturing; however there are buyers who are price-sensitive. Bangladesh is a go-to place for such buyers and the three-digit growth of Bangladesh’s T-shirt shipment to India in just one year supports this fact.
Third product that was imported by India the most from Bangladesh in 2021 was men’s shirt (woven). The shipment valued US $ 50.79 million, up 26.22 per cent from 2020. The growth is timely as men’s shirts constitute around 6-7 per cent of India’s total apparel domestic retail market valuing nearly US $ 5.50 billion, of which 94 per cent(US $ 5.17 billion) is shared by men’s shirts. The market is projected to grow at decent 11 per cent CAGR by 2030 and the outlook looks great! A lot of men’s shirt brands, both domestic (Aldeno, for example) and international, are foraying or increasing their presence in the Indian market and that’s what Bangladeshi apparel makers should know.
‘Made in Bangladesh’ Sweater is another product that is gradually making its space in the Indian apparel retail arena with exports reaching US $ 37.35 million in 2021, up 41.37 per cent Y-o-Y growth. India’s sweater market is worth US $ 3.81 billion in 2022 which is expected to grow by over 5 per cent CAGR by 2026. Since Bangladesh is making great strides in its sweater manufacturing lately, it could tap better shares in the Indian sweater market in time to come.
Womenswear market in India is on the rise, gradually but steadily, with a total apparel retail market cap of 45 per cent in 2022. Women’s suits/ dresses are the products that Bangladeshi apparel makers are constantly eyeing. In 2021, India’s import of these products from Bangladesh valued US $ 35.08 million, noting 30.12 per cent Y-o-Y growth.
Special mention – The foundation garment industry that includes products such as shapewear, sports bra, and other types of lingerie etc.,in India has been driven by increasing demand during the past few years owing to increasing health consciousness, the inclination towards sports and fitness, and rise in awareness about skin problems among women. It is believed that shapewear market in India is around US $ 450 million opportunity today which will grow at a CAGR of 9-10 per cent in next 10 years. Tapping early opportunities in this segment, Bangladesh’s garment makers shipped US $ 20.71 million worth of foundation garments in India during 2021, noting a whopping growth of 191.28 per cent on Y-o-Y basis.