Synopsis:
- In the past, countries such as Bangladesh and Vietnam captured a large part of China’s declining share in the global readymade garment (RMG) exports while India failed to adequately capitalise on China’s losing share. Recent political upheavals and social unrest in Bangladesh, which is the second largest exporter of RMG after China, present an opportunity for the Indian RMG sector.
- In case of sustenance of the socio-political disturbance for more than one or two quarters, Bangladesh exporters would face difficulty in ensuring on-time delivery to its customers. In such a situation, India is expected to gain monthly export orders of USD 200-250 million in the near term. As global RMG brands and retailers are relatively stickier with their sourcing partners, a large part of this market share loss could be permanent and lead to a gain in monthly export orders of around USD 300-350 million in the medium term. Entities with substantial capacities are likely to benefit the most, as they can manage large single orders from global brands. Additionally, those with operational efficiency and backward integration encompassing weaving, knitting, dyeing, and fabric processing, are poised to gain the most, as global brands prefer a one-stop solution.
- Bangladesh’s RMG exports have registered a 17% de-growth in Q1FY25 on a y-o-y basis while Indian RMG exports have grown by 4% during the same period. Bangladesh encountered some market share erosion in Q1FY25, especially due to the impact of socio-political disturbances and inadequate forex availability which benefited India leading to the narrowing down of the ratio of RMG exports of Bangladesh to that of India from around 3.2x in FY24 to 2.5x in Q1FY25
