India gains from Bangladesh labour unrest

The labour unrest in the readymade garments sector in Bangladesh has put Indian apparel exporters in an advantageous position.

According to a leading Indian business newspaper, the US and EU are diverting orders from Bangladesh to India to meet their apparel requirements for the upcoming summer season.

Indian apparel exporters are making most of the situation. They are scaling up operations and negotiating deals with foreign buyers so that they can enjoy a bigger pie of the overseas markets, the Economic Times reported.

It quoted DK Nair, general secretary, Confederation of Indian Textile Industry (CITI), as saying "Though we do not want to take advantage of any country's problem, it is true that orders are being diverted to India from US and EU, and this is helping our apparel exports."

Export in dollar terms for April-October of the current fiscal has increased by 15.5% over the same period of the previous financial year and reached $8,259 million, the report said.

In rupee terms, apparel exports from India have increased by 26.18% in the same period to touch Rs 490.96 billion compared to Rs 389.11 billion in the same period of the previous year.

Exporters from Tirupur, the largest knitwear hub of the country, have bagged good export orders due to the labour unrest in Bangladesh's garment sector.

But the exporters say that unrest in Bangladesh is not the only reason for the boost.

"Bangladesh is not the sole reason for this upswing. Both the US and Europe are slowly recovering from the economic slowdown which is getting reflected in the order position. Units in Tirupur remained underutilised due to the recession that had gripped the US and Europe. But now the situation has improved and the units are flooded with orders," Sanjay Kumar Gupta, CEO, Tirupur Exporters Association told the newspaper.

K Selvaraju, secretary general, Southern India Mills Association, added, "Not only the US and Europe, even China is picking up good volumes of yarn, textiles and fabrics from India. So the textile industry in the country is in a good position right now".

Bangladesh has just revised wages of its garment workers which has put Bangladesh roughly in the same league with apparel exporters from India, Sri Lanka and Cambodia. This will make Bangladesh less competitive in the world markets.

HKL Magu, senior vice-chairman, Apparel Export Promotion Council told the ET, "Earlier, there was a gap of 20% in cost component between Bangladeshi and Indian apparel exporters. But with rising wages, that gap is expected to narrow down. Indian apparel exporters are now overbooked with orders for the upcoming summer season.

We are also negotiating deals with foreign buyers as rupee is now hovering around the 61 -62 level against the dollar. When the rupee had touched the 68 level, foreign buyers had renegotiated their deals. Now that rupee has strengthened, we have to revisit the deals.”