The timing of the political unrest was unfavourable for Bangladesh’s premier ready-made Garment sector. The South Asian nation, which now ranks second globally in terms of clothing supply, was expected to struggle in 2025 with the loss of tariff-free access to the European fashion market and the potential relocation of its manufacturing base to other nations such as Vietnam and India.
In the short term, India’s Garment sector, which has underperformed over the past ten years, could benefit slightly from export markets. But, if Bangladesh’s ongoing issues lead to a significant restructuring of the Garment sector supply chains in the long run, it could have to contend with fierce competition from China, Vietnam, and other nations. Order losses might result from the Bangladeshi issue for India’s textile and apparel industry’s upstream spinning sector.
Indian textile industry investors in Bangladesh, such as Shahi Exports, Pearl Fashions, and Gokaldas, are expected to encounter difficulties sustaining their production flows soon. Approximately 25% of the Garment sector investments in the neighbouring nation are from India.
Nonetheless, the scenario has been seen favourably by Indian textile firms in the market. On Tuesday, there was a 5–19% increase in Arvind, KPR, Gokaldas, Vardhman, Welspun, and SP Apparel stocks.
Bangladesh depends heavily on trade; 85% of its products exports are made up of clothing. Think tank GTRI stated in a note that Bangladesh’s Garment sector exports, at over $50 billion (see chart), are currently more than three times those of India, which are valued at $15 billion.
The Apparel Export Promotion Council’s (AEPC) secretary general, Mithileshwar Thakur, called the current state of affairs in Bangladesh a “matter of great concern.” “India has no desire or intention of taking advantage of this unfortunate circumstance in a neighbouring country that is friendly.” Nonetheless, the apparel sector is working hard to increase Garment sector exports on its own, given its merits.
Bangladesh’s textile industry may face disruptions in the short term, prompting some Garment sector orders to shift to India. However, the industry’s long-term goal is to enhance quality and comply with global standards. The Confederation of Indian Textile Industry (CITI) believes this could impact the supply chain, potentially affecting production schedules and delivery timelines. Indian textile hub Tirupur, known for its robust manufacturing capabilities, may emerge as a key beneficiary of this shift.
Bangladesh’s apparel sector is crucial for Indian spinning and fabric sectors, as they rely heavily on India for spinning and fabric production. If Bangladesh recovers, India’s yarn and fabric exports will also benefit. India’s stable sourcing and timely delivery advantage will drive buyers to India as a de-risking measure. Global retailers are diversifying production bases away from Bangladesh, and the current crisis could accelerate this trend. However, India’s gains in the global textiles and clothing market could depend on structural changes in the industry, as 90% of fabric production is still in the decentralized powerloom sector.
Bangladesh has halted banks and trade for a week due to uncertainty around existing orders and container cargo. This could impact the Indian spinning industry, as international brands turn towards India to meet demand. However, a halt in dumping cheaper clothes from Bangladesh could also positively impact the domestic industry. The preference for Bangladesh over India is primarily due to cost benefits, which may remain to a large extent. Major Garment sector relying on Bangladesh for sourcing may experience delays and decreased availability, potentially impacting inventory levels and sales in the global retail market.
