$2.4 billion textile opportunity: How Bangladesh crisis could boost India’s global market share – SME News

By Kanishk Maheshwari

The textile and apparel sector is an important and strategic sector of the global economy, driving significant employment, trade, and innovation worldwide. The apparel market is expected to reach a valuation of $1.79 trillion in 2024 (1.63% of the global GDP), reflecting its substantial contribution to economic activity worldwide. It is projected to grow at a compound annual growth rate (CAGR) of 2.81% from 2024 to 2028. India stands as one of the world’s leading producers of textiles and apparel, currently contributing around 4-5% to the global apparel market.

Despite this, there remains significant potential for growth. With its vast production capabilities, skilled labour force, and rich tradition in textiles, India is well-positioned to expand its market share on the global stage. The country’s textile industry is expected to grow at a CAGR of 10% from FY20, reaching a value of $190 billion by FY26 and further expanding to $350 billion by FY30. 

50% IPOs fall in a month after day 1 bonanza

Reliance eyeing to get third-time lucky in quick commerce

GST Council Meeting Highlights: New GST invoice system from October 1; Car seat tax hikes to 28%

PM Modi extends heartfelt wishes to people on occasion of Hindi Diwas

The interconnected textiles industry of India and Bangladesh 

The textile industries of India and Bangladesh have a long-standing interconnection, with India specializing in the upstream segment by supplying intermediate inputs such as silk, cotton, yarn, and fabrics to Bangladesh. Conversely, Bangladesh excels in the downstream segment, focusing on final apparel production and exporting these finished goods globally, including India. 

The current political environment in Bangladesh has created significant disruptions in the textile supply chain, impacting both domestic production and international trade. Political instability has led to delays in the manufacturing process, causing interruptions in the flow of raw materials and finished goods. 

This political crisis presents a short-term setback for India, as the disruption will likely impact the export of fibre to one of its key markets. Any instability could lead to a decline in demand, affecting India’s fibre exports in the immediate term. However, this crisis also opens a long-term opportunity for India to strengthen its domestic supply chain. By focusing on developing and expanding its garment manufacturing capabilities, India can reduce its reliance on external markets for finished goods. This shift towards a more self-reliant and robust domestic market could not only mitigate future risks but also position India as a more competitive player in the global textile industry. 

India is a major exporter of cotton and synthetic fibres to Bangladesh, accounting for approximately 20%-25% of the yarn imported by Bangladesh. Additionally, in the 2022-23 fiscal year, Bangladesh’s garments industry, which accounted for $47 billion in exports, made it the second-largest exporter of apparel after Vietnam. India’s imports from Bangladesh itself totalled $1.89 billion in 2023. This supply chain is likely to experience short-term disruptions due to the current political scenario, leading to slower production rates, missed deadlines, and potential financial losses for both Bangladeshi manufacturers and Indian exporters. 

Additional $2.4 billion opportunity for India 

Indian manufacturers need to see this as an opportune time to realize the potential and strategically fill the global supply chain disruptions by on one hand ramping up production and enhancing capacities and on the other investing in technology and innovation to enhance competitiveness. The country should maximize its spinning capacity and leverage government policies to set up additional spinning and garment units, positioning itself as a preferred destination for domestic and global buyers. To enhance the country’s competitiveness in garment exports, it is crucial to improve the skills and employability of graduates from Industrial Training Institutes (ITIs) and provide specific skill courses. 

By aligning ITI curricula with the specific demands of the garment sector, including advanced techniques in sewing, quality control, modern production technologies and advanced machinery, India can develop a workforce that is ready to work efficiently from day one. There is a need for this targeted skill development that will help reduce the training time for new hires and increase productivity.

To position India’s position as a leading exporter in the global textile and apparel market, adherence to quality standards is essential to meet international market requirements, reduce product rejections, and build trust with global buyers. Therefore, the establishment of government-authorized testing labs that ensure garments meet both domestic and international standards and attain specific standards and norms for garment quality such as ISO 9001 (Quality Management Systems) etc will make certification processes more accessible and build confidence globally.  

As Indian textile companies scale up operations, they will generate additional employment and boost local economies, leading to increased domestic consumption of textile products. This growth will also enable the country to tap into new markets, such as the European Union, Canada,  Australia, and Japan, which currently rely heavily on Bangladesh for exports. Thus, resulting in India becoming a preferred destination for securing approximately 10-12% of Bangladesh’s export orders, worth $2.4bn annually. 

For showcasing Indian garments and textiles globally, the government should focus on building trade centres and exhibition hubs across key garment manufacturing regions. These centres can serve as platforms for showcasing Indian apparel, attracting international buyers, and facilitating trade deals. These can be worked in PPP mode for managing these trade hubs and exhibitions, ensuring modern facilities, effective marketing, and sustainable operations 

Additionally, the country’s rich tradition in textiles, coupled with decades of experience and expertise, ensures that Indian manufacturers can maintain high-quality standards while scaling up production or pivoting to new product lines. Thus, this is an opportunity in disguise for Indian companies to broaden their market share and position India as a key player in the global textile supply chain and contribute significantly to the international market. This, in turn, will spur growth and attract investment in the Indian textile sector, paving the way for long-term economic benefits and a more robust presence globally.

Kanishk Maheshwari is the Managing Director at Primus Partners. Views expressed are personal. Reproducing this content without permission is prohibited.

Subscribe to Financial Express SME (FE Aspire) newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises 

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}