Dhaka, one of the largest exporters of garments globally, has seen orders from western brands slow down recently amid political unrest at home. This has led to a ripple effect on cotton exports from India, which supplies raw materials to Bangladesh's thriving garment industry.
According to industry sources, Western brands have adopted a wait-and-see approach and are not placing any fresh orders currently until the domestic situation stabilizes in Bangladesh. While production units in Dhaka are working overtime to clear pending supply commitments, new inquiries are lacking.
This decline has impacted India's cotton shipments to Bangladesh, which sources the majority of its cotton requirements from its larger neighbor. Industry executives note inquiries are now coming into India directly as international brands explore alternative sourcing locations.
However, Indian exporters will need to boost production capacities and product ranges first to fully capture the emerging opportunities. While initiatives like the government's Production Linked Incentive scheme can help boost capacities, India will need to improve its cost competitiveness and acceptance of design-led products to gain market share from current leaders like Vietnam and Cambodia.
Bangladesh's garment exports account for over 80% of total exports and 11% of GDP. The slowdown in orders deals a blow as costs were already surging amid global inflation and domestic issues like power outages. As the interim administration in Dhaka works to restore stability, international brands will be closely watching the situation before committing fresh investment.
