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Bangladesh overtakes India in apparel exports: Indian companies grabbing
Bangladeshi quota in Europe
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Colombo News Desk CND on 29 December, 2009 10:21:00
 
It said, India’s export volume is down 80 per cent this year for two reasons:
one, the global economic downturn and increasing competition from Bangladesh,
Vietnam and Sri Lanka.
During the downturn, buyers looked for cheaper deals and Indian exporters were
unable to compete on costs due to rising raw material and power costs, the
survey found.
The second reason: many Indian firms are setting up units and offices in
Bangladesh to avail the benefits of duty-free access. Prominent among those who
have set up units in that country are House of Pearl Fashion (two units) and
Raymond (one unit).
“Bangladesh has a cost edge of 9-29 per cent across various products. The
country has duty-free access to European markets and labour is cheap. It is more
profitable to export from Bangladesh, than from India,” the survey quoted
Sudhir Dhingra, managing director of Orient Craft Exports, as saying.
Deepak Seth, chairman of the House of Pearl Fashions, said the company’s units
in Bangladesh had been operating “efficiently and profitably”.
The company would double its capacities for T-shirts and woven tops/bottoms in
Dhaka in the next financial year. Seth said labour costs in Bangladesh were 50
per cent of that in India and there was no duty on imports to EU, Australia and
Canada.
The Bangladesh government’s huge priority to the sector is another big draw.
House of Pearls has units in Indonesia and Vietnam as well.
Craft was planning a unit in Bangladesh a year ago but dropped the idea due to
changed focus of business.
“There are no difficulties in setting up a unit in Bangladesh and we
considered setting up a base here. However, we are focusing more on domestic
markets now,” said Dhingra.
Analysts and textile experts said it was not common for Indian companies to set
up units in Bangladesh.
“There are distinct advantages of setting up units in Bangladesh but only a
few big players have done it. Smaller players will not venture into setting up
units in other countries,” Prakash Agarwal, vice president of consulting firm
Technopak said.
But the million-dollar question is: can Indian companies take advantage of quota
of Bangladesh’s garments? The European Commission recently unearthed such a
bungling by certain dishonest Chinese businessmen, which tried to use
Bangladesh’s name to market its apparels in Europe and is taking punitive
steps against this.