When it comes to apparel exports, India is considered a non-traditional export destination from Bangladesh’s perspective, which is unlike the USA and Europe, where the lion’s share of the country’s offerings make way to and are considered the export strongholds.
Despite this, Bangladesh has made steady and strong inroads into India in the last couple of years. For the first time in 2019, Bangladesh’s overall exports to India touched the billion-dollar mark, with goods worth US $ 1.25 billion sold to the neighbouring country, and of the total amount, apparel sector alone earned US $ 499.09 million in 2018-19 fiscal, which was 79.09 per cent higher compared to what was US $ 278.67 million in the previous year.
“Bangladesh offers apparel goods at reasonable prices, while global retailers are opening more outlets in India, who buy products from here. Production costs in India increased due to implementation of the Goods and Services Tax (GST) in India,” Shahidullah Azim, former Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), explained the reasons for Bangladesh’s rising apparel export to India, further adding that low transportation cost is another factor which has encouraged importers to buy goods for both local and foreign brands.
Also, that Bangladesh Government provides a 4 per cent cash incentive against export of apparel goods to non-traditional export destinations played a significant role in pushing up exports to India, felt industry insiders. To add to this, India is offering duty-free market access to all Bangladeshi goods except alcohol and tobacco.
Looking at the trend of apparel exports to India, Bangladesh Commerce Minister Tipu Munshi expressed hope that Bangladesh has the capability to export US $ 2 billion worth of apparels to India in the next 2 years on the back of its duty-free access to the market and rising demand for garment items at competitive prices.
“Apparel export to India rose significantly in the last 2 years and we have the capability to export more,” Tipu Munshi underlined in 2019 during his meeting with Adarsh Swaika, the acting High Commissioner of India in Bangladesh then.
However, the outbreak of COVID-19 seemed to have applied brakes on Bangladesh’s overall apparel exports. The sealing of international borders, large-scale closure of retail chains and subsequent fall in demand and the extensive lockdown put in place by the Bangladesh Government – that rendered the flourishing readymade garment sector of Bangladesh to stop production and take a backseat for more than a month – have hit garment production and exports hard.
“The problem (COVID-19) is global and not specific to the country. It is also a new problem and no one really knows how to tackle the situation. On the business front, Bangladesh was among the first countries to announce a stimulus package when the virus hit the country. The Taka 5,000 crore stimulus package for the export industry to pay wages and salaries brought great relief and was helpful in paying salaries for the month of March. But frankly, the need is much more. Moving forward, we expect the industry to earn part of the revenue required while the Government could come up with another package to meet the shortfall,” maintained Tipu Munshi in a recent interview with Apparel Resources, explaining the trying times the industry is going through and what his Government has done and plans to do in the future to bring the sector out of this crisis.
However, not withstanding the challenges, the two neighbours have decided to take some steps to facilitate more trade. India and Bangladesh recently made some decisions on the extension of protocol routes, inclusion of two new ones, and declaration of five new ports of call, which came into effect following signing of the second Addendum to the Protocol between Indian High Commissioner to Bangladesh Riva Ganguly Das and Bangladesh’s Shipping Secretary Mezbah Uddin Chowdhury, which are expected to give a boost to mutual trade and commerce.
Even Commerce Minister Tipu Munshi, in a recent video conference, called upon businessmen from both the countries to come forward and resolve complexities in mutual trade. The conference was attended by Jitendra Singh, India’s State Minister for Development of North Eastern region in the Prime Minister’s Office; Conrad K. Sangma, Chief Minister of Meghalaya; Mohammad ZafarUddin, Secretary to the Commerce Ministry of Bangladesh; Sarifa Khan, Additional Secretary and Riva Ganguly Das, Indian High Commissioner to Bangladesh.
“It will be easier to resolve problems if they are identified. I hope the Indian businessmen will take initiatives in this regard. Solving the identified problems will not only benefit both countries, but also speed up trade,” Tipu Munshi said in the video conference, titled ‘Vision Meghalaya, Vision North East India Bangladesh partnership’, organised by the Associated Chamber of Commerce and Industry of India.
With the signing of the second Addendum between the two countries, many bottlenecks towards flourishing of mutual trade and commerce are expected to be sorted out now.
Among the agreed points between the two countries include routes, ports of call and movement on shallow draft mechanised vessels.
In terms of routes, the number of Indo-Bangladesh Protocol (IBP) routes is being increased from eight to 10 and new locations are also added to the existing routes. Inclusion of Sonamura-Daudkhandi stretch of Gumti River as IBP route Nos. 9 and 10 in the protocol will improve the connectivity of Tripura and adjoining states with India and Bangladesh’s economic centres and will help the hinterland of both the countries. This route shall be connecting all the existing IBP routes from 1 to 8.
The operationalisation of Rajshahi-Dhulian-Rajshahi routes and their extension up to Aricha will further help the augmentation of infrastructure in Bangladesh, as it would reduce the transportation cost to northern part of Bangladesh through this route. It will also decongest land custom stations on both sides.
In terms of ports of call, under the current protocol, there are six ports of call each in India and Bangladesh, which are Kolkata, Haldia, Karimganj, Pandu, Shilghat and Dhubri on the Indian side, and Narayanganj, Khulna, Mongla, Sirajganj, Ashuganj and Pangaon on the Bangladesh side.
The newly added five ports of call on the Indian side now are Dhulian, Maia, Kolaghat, Sonamura and Jogigopha, and on the Bangladesh side are Rajshahi, Sultanganj, Chilmari, Daudkandi and Bahadurabad. Besides, two more extended ports of call –Tribeli (Bandel) and Badarpur on Indian side, and Ghorasal and Muktarpur on Bangladesh side – have been added through this addendum, increasing the number to 11 ports of call and two extended ports of call in both the countries. Inclusion of Jogigopha in India and Bahadurabad in Bangladesh as a new port of call will provide connectivity to Meghalaya, Assam and Bhutan.
Jogigopha also becomes important, since a Multimodal Logistics Park is proposed to be established there.
The new ports of call would enable the loading and unloading of cargo transported on the IBP Route and provide a stimulus to the economic development of the new locations.
As a path-breaking development, both sides have also agreed to introduce trade between Chilmari (Bangladesh) and Dhubri (India) through the use of shallow draft mechanised vessels. This initiative will allow exports of Bhutanese and North East cargo to Bangladesh and easy access for the traders to the hinterland of Bangladesh, enhancing the local economy in Bangladesh and the lower Assam region of India.
Under this protocol, inland vessels of both the countries can ply the designated protocol route and dock at ports of call in each country, notified for loading/unloading of cargo.
It is expected that these additions to the protocol will greatly facilitate the bilateral trade, with improved reliability and cost effectiveness for the business community and the people of both the countries.
The connectivity provided by the existing and the newly added protocol routes is all the more pertinent in the present COVID-19 scenario as it will be instrumental in providing economical, faster, safer and greener mode of transport for traders and business communities of both the countries and will also have environmental benefits for the region.
It’s just a matter of time now before Bangladesh’s overall exports including that of apparel items to India touch new heights.