India's Bangladeshi Connection: The Textile Industry's Interdependence

Introduction: Bangladesh, the world's second-largest exporter of garments, is a key player in the global textile market. Its remarkable success is driven by an efficient supply chain that appeals to major global brands seeking cost-effective production solutions.

A significant factor behind this achievement is the strong economic cooperation between Bangladesh and the European Union (EU). Under the EU-Bangladesh Cooperation Agreement of 2001, the partnership extends beyond trade and economic development to include human rights, good governance, and environmental initiatives. Photo: India Today.

Bangladesh and WTO: Bangladesh's membership in the World Trade Organization (WTO) since 1995 further bolsters its position.

As a least developed country, it benefits from the EU's 'Everything but Arms' (EBA) arrangement, which provides duty-free and quota-free access to the EU market for all exports except arms and ammunition. This arrangement has been pivotal for Bangladesh, which is the one of the largest beneficiaries under the EBA framework.

The EU remains Bangladesh's primary trading partner, accounting for 20.7% of the country’s total trade in 2023, while Bangladesh is the EU's 36th largest trading partner.

Notably, clothing comprises over 90% of the EU’s total imports from Bangladesh, highlighting the country's dominance in this sector. Meanwhile, EU exports to Bangladesh are primarily machinery and chemical products.

While China remains the global leader in the apparel market, with exports valued at $182 billion in 2022, Bangladesh has firmly secured the second spot. Following Bangladesh are Vietnam ($35 billion), Turkey ($20 billion), and India ($18 billion). 

Bangladesh’s apparel industry contributed a staggering 84.58% of its export earnings during this period, underscoring its critical role in the national economy. This favorable trade environment also presents significant opportunities for Indian textile companies.

Firms like Sangam India Ltd (An Indian Yarn and Fabric manufacturer, Rs.417.20), have found a lucrative market by supplying yarn and fabrics, particularly polyester viscose dyed yarn, to Bangladesh's thriving garment industry. The consistent demand from Bangladesh enables these Indian companies to maintain robust business, ensuring a steady market for their products.

Thus, the stability of Bangladesh is as vital for the continuity and growth of its garment industry, as with the fortunes of Indian Yarn and Fabric Manufacturers. Or any disruption in Bangladesh is likely to have a major impact on the Indian textile sector.

As Dr. Muhammad Yunus has emphasized, political and economic stability in Bangladesh is therefore essential for sustaining this symbiotic relationship. Any instability could disrupt the supply chain, directly impacting Indian suppliers who rely heavily on consistent orders from Bangladeshi manufacturers.

Conclusion: The interdependence between India and Bangladesh in the textile sector highlights the importance of stability in the region. While Bangladesh's growth in the global apparel market provides substantial opportunities for Indian companies, any disruption in its stability could have far-reaching consequences.

Ensuring political and economic stability in Bangladesh is not just a regional concern but a strategic necessity for the sustained growth of the textile industries in both countries.

Highlights:

🏵️Bangladesh's Position: Bangladesh is the world's second-largest garment exporter, significantly benefiting from EU trade agreements.

🏵️Economic Cooperation: The EU -  Bangladesh Cooperation Agreement and the 'Everything but Arms' arrangement provide substantial trade benefits to Bangladesh.

🏵️Global Apparel Market: China leads, followed by Bangladesh, Vietnam, Turkey, and India in global apparel exports.

🏵️Indian Opportunities: Indian companies like Sangam India Ltd. capitalize on supplying yarn and fabrics to Bangladesh.

🏵️Importance of Stability: Political and economic stability in Bangladesh is crucial for sustaining the textile industry's growth in both nations.