Bangladesh has overtaken India in readymade garment exports despite the recent setbacks it received like instances of building collapses and fire at manufacturing units, says a study by Exim Bank.
Between January and October 2013, readymade shipments by Indian exporters to the US grew 6.3% to $3.2 billion, while the same by Bangladesh jumped 11.4% at $4.9 billion, the premier export finance agency said.
“In the absence of latest data, imports by the US are a very good benchmark of understanding the latest trends. Bangladesh has been aggressively pushing the garment exports and has made a slew of policy changes to facilitate those,” Exim Bank chief general manager Prahalathan Iyer told PTI.
Bangladesh’s garment exports increased from $6.8 billion in 2005 to $19.9 billion in 2012, recording a compounded annual growth rate (CAGR) of 16.6%. During the same period, India’s outward shipments rose from $8.7 billion to $13.8 billion, a CAGR of just 6.8%.
Iyer and his colleagues conducted a study, which revealed that Bangladesh offers sops like uninterrupted power and a priority at the Chittagong port for shipment. “They have to take it very seriously as the garment exports contribute 80% of Bangladesh’s total export earnings.”
Asked if recent events like a spate of fires and collapse of garment factories, which led to some anxiety over safety norms at these units among the Western retailers sourcing goods from the country’s eastern neighbour, is favourable for India, Iyer replied in the negative.
He said in October 2013, because of these incidents, there was a slowdown in Bangladeshi garment exports, which grew only 3%. But initial trends point out to a robust growth of over 41% in November, suggesting a healthy bounce back by the key sector.
Iyer said many of the sourcing companies have South Asia offices situated in India, but they source garments from either Bangladesh or Sri Lanka.