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Bangladesh's crisis disrupts global textiles, offering India a potential opportunity, but production constraints limit its gains

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The recent political upheaval in Bangladesh has once again thrust India's textile industry into the spotlight. In the past few weeks, a key question has been debated extensively among analysts, media, and industry experts: How will the political instability in Bangladesh impact India's textile industry? To gauge the potential impact, it's imperative to examine various factors and assess whether the current situation in Bangladesh poses a major threat to India's textile sector.

THE INDUSTRY

Bangladesh is one of the key players in the global textile market. According to the Bangladesh Garment Manufacturers and Exporters Association, it held an 8.5% share of global ready-made garment exports in FY23, second only to China. In comparison, India ranked seventh with a 3% to 4% share. Bangladesh's textile sector accounts for approximately 90% of its export basket. It has also captured 9.8% of the total US imports, amounting to $29.62 billion. Its success is primarily driven by its large workforce and low labour costs. As per UN Comtrade data, Germany, Poland, the UK, and Spain rely heavily on textile exports from Bangladesh.

The Delta country stands as a global textile powerhouse, exporting a remarkable $47.5 billion worth of garments in 2023. The industry employs approximately 4.22 million workers and contributes a substantial 18% to Bangladesh's Gross Domestic Product (GDP), which reached $1.429 trillion in 2023 in purchasing power parity (PPP) terms. Beyond ready-made garments, Bangladesh is also the world's second-largest exporter of cotton yarn. While its exports are massive, Bangladesh faces stiff competition for garment orders from other textile-producing nations like Sri Lanka, Vietnam, and India. The global textile market is dominated by six key players: China, Bangladesh, Vietnam, Italy, Germany, and India.