The recent regime change and uncertainties in the trade landscape in Bangladesh have negatively impacted several industries in India. However, one of the Indian industry sectors that has notably benefited is ready-made garments, largely due to the unstable economic and political situation in the neighboring country – one of the world’s most established garment exporters.
Both India and Bangladesh are key players in the global ready-made garment (RMG) market, but currency fluctuations in Bangladeshi Taka and ongoing supply chain disruptions have shifted the advantage toward Indian manufacturers. Traditionally, Bangladesh has been one of the largest exporters of ready-made garments, accounting for around 6-7% of the global market share, thanks to its cost-effective production and established relationships with major brands. In contrast, India holds a smaller share of approximately 3-5%.
Until last year, Bangladesh exported ready-made garments worth around $40 billion annually, making it one of the largest garment exporters in the world. In comparison, India exports about $16-18 billion worth of products each year, according to the latest industry data. However, this trend is expected to shift significantly in the coming years.
The current stagnation in Bangladesh's garment exports stems from several interrelated factors, including supply chain issues, currency volatility, and rising production costs. Additionally, economic slowdowns in major markets like the US and EU have led to decreased consumer spending on apparel, adversely affecting demand for Bangladeshi exports.
Rising raw material and labor costs have further squeezed profit margins for Bangladeshi manufacturers, making it challenging to compete with other low-cost producing countries. The ongoing disruptions from the COVID-19 pandemic and geopolitical tensions have caused delays and increased costs in sourcing materials and shipping products.
Moreover, the growing consumer demand for sustainable and ethically produced garments requires substantial investment in eco-friendly practices, which many manufacturers in politically unstable Bangladesh struggle to implement.
Traditional challenges such as compliance issues, market saturation, and limited diversification have long plagued the industry in Bangladesh. Although its cost competitiveness—bolstered by low labor costs—has made it an attractive option for international buyers, the country now faces increased competition.
In contrast, India’s strengths lie in its diverse product offerings and expanding manufacturing capabilities. Major exporters like Arvind Limited, Page Industries, Vardhman Textiles, Texport Industries, Shahi Exports, Gokaldas Exports, and KPR Mill are recognized for their high-quality products and robust export capabilities, serving global markets.
According to industry sources, Indian companies are experiencing a significant shift in order placements. A senior executive at a large garment exporter, who wished to remain anonymous, noted, “We’ve seen at least a 15-20% increase in export orders, especially since June and July, following the political uncertainties in Bangladesh.”
Additionally, a recent report from credit rating agency Crisil highlighted that companies in India’s ready-made garment sector are receiving an uptick in sales inquiries from key export destinations, including the US and Europe.