In response to the ongoing political instability in Bangladesh, India is looking to seize the opportunity to boost its textile and garment sector.
The Indian government is set to introduce several measures in the upcoming budget aimed at supporting domestic manufacturers, encouraging local production, and making Indian textiles more competitive in global markets.
The ongoing crisis in Bangladesh, a key player in the global garment industry, has led to disruptions in the country’s exports. As a result, global retailers have been seeking alternatives to the country’s products.
India, with its large and diverse textile industry, is one of the countries emerging as a potential alternative. Global companies, particularly in the United States, have increasingly looked towards India to source their garments, according to exporters.
Mithileshwar Thakur, the Secretary General of India’s Apparel Export Promotion Council, noted that Indian exporters have been struggling to keep up with the surge in demand, as many US companies have started diverting their orders to alternative suppliers, including India.
This shift in demand has highlighted the opportunities for growth within India’s textile industry, but also underscored the challenges of meeting such increased demand within the country.
India’s textile industry, which is one of the largest employers in the country with an estimated workforce of 45 million people, is preparing for significant changes in the upcoming fiscal year.
The government is reportedly considering a 10%-15% increase in the textile ministry’s budget allocation for 2025/26. This would see the ministry’s budget rise from the current 44.17 billion rupees (approximately $511 million) to a higher figure, reflecting the government’s commitment to strengthening the sector.
Alongside the increase in budget allocation, the government is also likely to raise the funding for production-linked incentives (PLI) for textiles.
The PLI scheme, which offers tax incentives and other concessions to companies that produce domestically, is expected to receive a boost. The proposed allocation for this scheme could rise to around 600 million rupees, up from the current 450 million rupees for the ongoing fiscal year.
To further enhance the competitiveness of India’s textile sector, the government is considering tariff cuts on key raw materials such as polyester, viscose staple fibre, and textile machinery.
These tariff cuts would make it more affordable for Indian manufacturers to source the materials they need to produce garments at competitive prices.
This is particularly important as the current import tariffs on these materials range between 11%-27%, which is significantly higher than the near-zero duties in Bangladesh.
The higher tariffs in India create a disadvantage for Indian garment exporters, making it more expensive for them to produce garments in the country.
A reduction in these tariffs could level the playing field for Indian exporters, enabling them to compete more effectively with other countries in the region. India’s textile sector has seen notable growth in recent years, particularly in the export market.
According to data from the U.S. Office of Textiles and Apparel, India’s textile exports to the U.S. grew by 4.25% to $4.4 billion between January and November of last year, despite the broader global challenges. In comparison, Bangladesh’s exports to the U.S. fell by 0.46% to $6.7 billion during the same period.
Shahidullah Azim, a Dhaka-based garment factory owner, shared that some American buyers have shifted their orders from Bangladesh to India and Vietnam due to the ongoing political crisis in Bangladesh.
This shift in sourcing has resulted in a rise in Indian textile exports, which saw an impressive 7% year-on-year growth during the first eight months of the current fiscal year.
India’s textile and garment exports are expected to surpass $23 billion by the end of the year, with ready-made garment exports expected to exceed $16 billion.
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