Bangladesh overtakes India in apparel exports: Indian companies grabbing Bangladeshi quota in Europe

By Rahman Jahangir Dhaka- Bangladesh has overtaken India in apparel exports this year as for the first nine months, its exports stood at 2.66 billion US dollars, ahead of India ‘s 2.27 billion US dollars, according to a survey reported by state-run BSS news agency Wednesday.In 2008, both the countries were at the same level (US $10.9 billion) with each having three per cent of global apparel exports.

It said, India’s export volume is down 80 per cent this year for two reasons: one, the global economic downturn and increasing competition from Bangladesh, Vietnam and Sri Lanka.
During the downturn, buyers looked for cheaper deals and Indian exporters were unable to compete on costs due to rising raw material and power costs, the survey found.
The second reason: many Indian firms are setting up units and offices in Bangladesh to avail the benefits of duty-free access. Prominent among those who have set up units in that country are House of Pearl Fashion (two units) and Raymond (one unit).
“Bangladesh has a cost edge of 9-29 per cent across various products. The country has duty-free access to European markets and labour is cheap. It is more profitable to export from Bangladesh, than from India,” the survey quoted Sudhir Dhingra, managing director of Orient Craft Exports, as saying.
Deepak Seth, chairman of the House of Pearl Fashions, said the company’s units in Bangladesh had been operating “efficiently and profitably”.
The company would double its capacities for T-shirts and woven tops/bottoms in Dhaka in the next financial year. Seth said labour costs in Bangladesh were 50 per cent of that in India and there was no duty on imports to EU, Australia and Canada.
The Bangladesh government’s huge priority to the sector is another big draw. House of Pearls has units in Indonesia and Vietnam as well.
Craft was planning a unit in Bangladesh a year ago but dropped the idea due to changed focus of business.
“There are no difficulties in setting up a unit in Bangladesh and we considered setting up a base here. However, we are focusing more on domestic markets now,” said Dhingra.
Analysts and textile experts said it was not common for Indian companies to set up units in Bangladesh.
“There are distinct advantages of setting up units in Bangladesh but only a few big players have done it. Smaller players will not venture into setting up units in other countries,” Prakash Agarwal, vice president of consulting firm Technopak said.
But the million-dollar question is: can Indian companies take advantage of quota of Bangladesh’s garments? The European Commission recently unearthed such a bungling by certain dishonest Chinese businessmen, which tried to use Bangladesh’s name to market its apparels in Europe and is taking punitive steps against this.