The Indian government has announced subsidies for setting up capital machinery in states lagging in industrialization, such as Bihar and Punjab. Special government benefits are also being provided for land purchases. Additionally, the government will contribute to wages for female workers in factories established in these regions. According to local sources, these supportive policies aim to expand India’s garment export market globally.

Industry insiders said India has taken several steps in recent years to strengthen its position in the international garment export market. In addition to announcing special benefits for state-based industrialization and investment, the country has introduced various initiatives, including cash incentives, over the past 10-15 years to sustain its place in the global garment market. India also aims to overtake Bangladesh, the second-largest garment exporter. However, despite these efforts, India has yet to solidify its position in the global market and continues to export less than half of what Bangladesh does.

According to government export statistics, India exported $15 billion worth of garments globally in the 2013-14 fiscal year. Ten years later, the figure slightly decreased to $14.5 billion in 2023-24. Bangladesh, in contrast, exported $24.49 billion in garments in the 2013-14 fiscal year, increasing to $36.16 billion in 2023-24. This means India’s garment exports in the last fiscal year amounted to much less than 50 percent of Bangladesh’s.

India’s textile ministry outlined a plan in 2015 to raise textile and garment exports to $300 billion and increase the sector’s share of global trade to 20 percent by the 2024-25 fiscal year. To achieve this, the country focused on ensuring global standards throughout the garment production process, attracting investment, enhancing worker skills, improving quality and productivity, adjusting the export structure to match rising costs, prioritizing research and innovation, upgrading the lives of weavers and artisans, strengthening partnerships with state governments, and overhauling existing schemes and policies. However, India has not met these goals, and its garment exports have instead declined.

Experts say India has long sought to establish a strong position in garment exports. However, the country’s entrepreneurs have focused more on meeting domestic market demand. Additionally, the requirement to use domestic raw materials has limited the country’s ability to expand garment exports, as it has had to produce fabric from raw materials according to buyers’ demands. Meanwhile, Bangladesh has capitalized on business flexibility to increase exports.

MA Jabbar, Managing Director of one of Bangladesh’s largest exporters, DBL Group, told Bonik Barta, “The government’s supportive policies, such as the EDF and cash incentives, have allowed Bangladesh to strengthen its backward linkages and explore new markets. When Bangladesh was using European machinery in the 1990s and beyond with government support, India could not import machines from abroad. India tried to follow Bangladesh’s industrial development model, but its efforts were less effective because Indian entrepreneurs focused more on other industries outside of garments and saw success there. Additionally, India’s domestic market demand is strong.”

However, MA Jabbar pointed out that India’s current initiatives are significantly different from previous ones and more attractive to entrepreneurs. “The country has announced numerous incentives. They are even inviting Bangladeshi garment entrepreneurs to invest in India. Bangladesh has a strong network with global garment brands, and its entrepreneurs are experienced. But with India’s newly announced incentives, we must remain vigilant. Nonetheless, Bangladesh still has many opportunities to capitalize on, and government policy support is necessary to unlock those opportunities. If Bangladesh can ensure the same government support as India, entrepreneurs could progress much further.”

Despite aiming to increase global market dominance, India’s reliance on cotton has hindered its garment export performance, according to industry insiders. They note that although the global garment market is shifting toward man-made fibers, India’s garment industry remains dependent on cotton, limiting its ability to meet targets.

Bangladeshi entrepreneurs believe it is essential to be cautious about the recent moves by India’s textile and garment giants. Indian entrepreneurs think the recent political instability in Bangladesh has created an opportunity to shift production activities to India.

Gautam Singhania, Chairman and Managing Director of India’s international brand Raymond, recently told the Times of India that they sell fabrics in Bangladesh. After the recent crisis, they are moving business from Bangladesh to India. Once the business moves to India, it won’t return to Bangladesh. While Bangladesh has a strong foundation in the garment sector, it lacks such strength in the textile industry. Recent developments in Bangladesh have created a major opportunity for Indian entrepreneurs like those of Raymond.

Singhania also mentioned to India’s news agency PTI that the company wants to seize the opportunities now available. According to him, the global ‘China +1 strategy’ will also play a supportive role for Indian entrepreneurs.

Bangladeshi entrepreneurs believe it is critical to take necessary measures to retain the market amid such activity by Indian businessmen.

Khandoker Rafiqul Islam, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, “There are significant differences between India’s past and current initiatives. India has now implemented several specific policies to promote industrial growth, such as incentives for capital machinery, a different wage structure for female workers, and assurances of uninterrupted energy. Bangladesh has weaknesses in all these areas. For example, gas prices are increasing, and power supply is not uninterrupted. Considering the current situation, Bangladesh will face much more competition than before, and the government needs to act now. Long-term tax and energy plans must be adopted to attract local and foreign investment. Port inefficiencies also need to be addressed.”

Bangladeshi garment exporters warned that if Indian entrepreneurs take full advantage of state-level benefits, Bangladesh will suffer as a major player in the global garment industry. Therefore, careful consideration is necessary in ensuring policy support.

Fazlul Hoque, former President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Bonik Barta, “India is taking new initiatives because it has been unable to capture the global garment market. If its past initiatives had succeeded, it would not be announcing new ones. Among the recently announced benefits are government support for investments in six to seven states, including Bihar and Punjab. If women workers are hired, the government will cover part of their wages. The country has struggled to perform well in the past, which is why it is now introducing new measures and expanding existing benefits. Not just India, we must monitor the initiatives and steps of any neighboring competitor. It would be a mistake not to. Even if previous Indian government incentives were ineffective, we cannot be complacent about the effectiveness of the new ones.”

Experts say India wants to capitalize on the ‘China +1’ strategy. Bangladesh primarily produces low-end garments at competitive prices. In such case, India could move toward high-end, value-added products based on its capabilities. The country also has strong fashion design skills. However, it is unclear whether India’s efforts to strengthen its global position will drive Bangladesh to the bottom. Still, Bangladesh must prepare by focusing on production efficiency, implementing new technologies, and reducing business costs. It is essential to seriously consider factors such as production efficiency, implementation of new technology, and reducing business costs. This is because Indian policymakers are now moving away from focusing on small to medium enterprises in the textile and apparel sector and shifting towards large-scale industrialization. Although the impact of these initiatives is not yet visible in the export market, it is only a matter of time before the recent efforts start bearing fruit. Therefore, Bangladesh must remain vigilant.

Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), told Bonik Barta, “As of 2024, India has not managed to outperform Bangladesh, which much is true. However, in the past few years, the country has adopted several policies. Previously, their strategy was more focused on meeting the demands of the domestic market. They were not very aggressive in the export-oriented market and preferred to keep the sector within the small to medium scale. Unlike Bangladesh, they did not build large factories or production facilities. They remained limited to their domestic market. Now, their productivity is increasing, and they are expanding their global operations. Additionally, India has its own supply of raw materials, starting from cotton, whereas Bangladesh has to purchase raw materials from various countries. I believe that through the implementation of the policies India has adopted in recent years, they could attract more buyers. International research has also shown that Western buyers are now prioritizing India over Bangladesh as a sourcing destination for apparel.”