The central bank data shows Bangladesh’s import of RMG raw materials such as raw cotton, yarn, fabric and dyeing materials was US $ 7.92 billion in the first half of FY ’24. The BGMEA reports Bangladesh’s apparel exports are 71 per cent cotton-based. The country, however, meets 99 per cent of its cotton demand through imports. After Brazil, India is the second largest cotton supplier to Bangladesh and holds a 12 per cent market share, according to United States Department of Agriculture (USDA).

In terms of MMF-based raw materials, 98 per cent of the country’s MMF demand is import-dependent. Central bank data shows that the country’s synthetic yarn import valued at US $ 1.52 billion in the July-December period of FY ’24.

Over a decade, Indian textile companies have made a substantial impact on Bangladesh’s textile industry by extending and maintaining their stronghold. With the growing demand for quality textiles and cost-effective production, Indian companies have emerged as key players in the country.

Indian textile companies possessing nearly a quarter of shares

Bangladesh’s and India’s textile industries have long entwined themselves. Given that both countries are adjacent to each other and have a common cultural background and history, it is not surprising that the textile industry has been vital for the growth of their economies. Lahoti Overseas Limited, a prominent textile company in India with a US $ 60 million turnover, produces 2000 tonnes of carts of yarn, fabrics and raw cotton annually, of which 20 per cent is imported into Bangladesh.

Square Corporation, one of the biggest global suppliers of yarn, has been exporting more than 220 containers to around 20 countries for over three decades and has its own office in Dhaka. Subhajit Koley, the company’s Country Manager demonstrated,“Out of all the export areas in India, around 70 per cent of them involve exports to Bangladesh. The demand for cotton is highest there because local exporters can hardly procure it, so we have to import from all the major companies.”

Another textile company in India, Indorama, holds a great share in Bangladesh. Indorama Group’s Spandex business, INVIYA®, established in India in 2012, is the country’s first premium spandex manufacturer, having started with a 400-tonne monthly production capacity. Over the last decade, the company has grown fivefold to a 2000-tonne monthly capacity. According to Sandeep Tayal, Head of Export Sales, “Bangladesh is an important market for us.”

Rahul Singh, Head of Business Development at Indorama said, “As of right now, we are working with many reputed mills in Bangladesh and supplying regular spandex, recycled spandex and black spandex on a regular basis. Bangladesh, being a large garment exporting country, is an important market for us.”

Companies see more potential in Bangladesh

Bangladesh is now amongst India’s top five export destinations. According to UN Comtrade Database on international commerce, India’s exports to Bangladesh in 2023 amounted to US $ 11.25 billion, with textile and RMG raw materials contributing significantly. India’s export of cotton to Bangladesh values US $ 2.18 billion, with man-made staple fibres coming in at US $ 139 million, knitted fabric coming in at US $ 58.06 million, laminated textile fabric at US $ 14.06 million and vegetable textile fibres at US $ 11.78 million. In terms of pricing, garment production, finishing and business set-up, Indian companies perceive a larger potential in Bangladesh.

Envision is one of the most well-known Indian textile enterprises that exported around 400 containers to Bangladesh last year where they have many large factories whose clients work with bigger brands like Zara, H&M, M&S and C&A.

Girish Chander, the company’s Coordinator of Business Development, stated, “Bangladesh has enormous potential. Everyone now seeks to choose sustainable and effective solutions which other countries cannot provide as they do not have the right kind of infrastructure for clothing business, either as producers or consumers, which is available in Bangladesh.”

In terms of foreseeing possibilities in Bangladesh, Sandeep Tayal said, “Major brands will always be drawn to Bangladesh to manufacture their apparel because of the ecosystem that exists in Bangladesh market. I have witnessed Bangladesh’s growth over the past 20 years to a degree that I could not have predicted earlier. Bangladesh, therefore, has everything it needs to prosper today.”

Surge of new Indian textile companies

The number of Indian businesses venturing into Bangladesh’s textile market has increased dramatically in recent years. These companies see a huge opportunity in the growing demand for textile products in both domestic and international markets.

This year, Tirupati Balaji Exim (P) Ltd., an Indian company with a massive annual capacity for fibres (3650 metric tonnes) with approximately 2.5 million metres produced annually for fabrics, made its business debut in Bangladesh. Alpine Expo Tex (P) Ltd., with an annual turnover of roughly  Rs.150 crore and offering woven fabrics, also anticipates new business coming up in Bangladesh. Bangladesh is now receiving recycled cotton exports from KS Spinning too, which has a capacity of 250 metric tonnes. Other companies aiming to thrive strongly in Bangladesh include Candour Textiles Pvt. Ltd., Kuku Fashion Pvt. Ltd., CTA Apparels and many more.

Payment system poses a roadblock

The problem of Letters of Credit (LC) is one of the main obstacles for Indian businesses in Bangladesh. In international trade, LCs are a common form of payment where a bank guarantees the buyer’s payment to the seller. It is supposed to be cleared that the payment to the seller must be made to them within three or four days of the items being received, which could take up to seven-ten days. But now it has allegedly been reported that payments are being made after 30-35 or even 40 days in certain circumstances.

One of the prominent companies, Texperts has been exporting 100-145 containers of yarn and around 200-300 tonnes of fabric every month to Bangladesh for the last 20 years and has nearly 20 per cent – 30 per cent of import in Bangladesh. The Deputy General Manager of the company, Abhik Dutta emphasised, “The primary problems we are now dealing with are foreign exchange and banking payments; if they worsen, we would have a huge problem.” All the companies that deal with this issue, such as Goel Polyfab, which sells 12 lakh metres of fabric annually in Bangladesh, have the same concerns and obstacles to overcome.

However, the Indian textile sector still believes Bangladesh holds a lot of promise, despite these challenges. The nation is a desirable place to invest because of its advantageous trade policies, stable political climate and strategic location.