“No doubt, Bangladesh has scripted an inspiring story for itself in the garment sector,” acknowledges Rahul Mehta, chief mentor & past president, Clothing Manufacturers’ Association of India (CMAI). “Today it has emerged as the second largest supplier of RMG to the global market. Despite its duty-free access to countries in the EU and its LDC status, the industry over there has done remarkably well to convert these benefits to its favour and build up a strong manufacturing base for garments. The local government has also been quite proactive and supportive in offering a favourable environment that has gone a long way in nurturing the local industry. In fact, Bangladesh has set a good precedent to be emulated by others.” 

Bangladesh enjoys preferential access in the EU under the ‘Everything but Arms’ (EBA), which has helped it in gaining a commendable market share in the EU. Today, with a share of about 61 per cent, the EU is the largest market for Bangladesh textiles products, followed by the US, with 15 per cent share. A detailed analysis of Bangladesh exports to key markets over the past 10 years indicate that, other than the EU and the US, exports to Japan and Russia too have been increasing and are growing at a CAGR of 36 per cent and 28 per cent, respectively.

Experts believe it is not only the duty-free access that has helped Bangladesh achieve this performance, even as countries like India, which has a traditional textile base, with a presence across the entire value chain of the textile and garment manufacturing, has languished badly. Till even 15 years ago, at about $9 billion, both countries were on a par with each other. But, since then, while Indian RMG exports stagnated at about $16 billion in 2019, Bangladesh has grown phenomenally by almost four times.

Less turnaround time

Experts concede that, while Bangladesh, backed by flexible labour laws, has built large garment units in recent years and thus enjoys a significant degree of scale, more than 80 per cent of units in India are still in the SME/unorganised sector, due to rigid labour laws and other challenges. Thus, it has not only failed to possess the inherent strengths of manufacturing, but is also not able to generate favourable treatment from large foreign buyers.

Rigid laws have prevented India from functioning flexibly in a seasonal industry. India has only three or four garment makers, with a turnover in excess of $100 million. Hence, the turnaround time of Indian firms from order to delivery is 63 days. In Bangladesh, the turnaround time is far less – about 50 days. Also, it takes only one day for a consignment to reach a port in Bangladesh. In India, it can take as many as 10 days for a consignment to reach a port. All such factors are barriers to creating scale.

One of the major reasons for Bangladesh’s sharp competitiveness is that it is cheaper to produce goods in Bangladesh than in India. According to a case study, the unit labour cost of producing a cotton shirt in the US is about $7, while the unit labour cost of producing the same shirt in India comes to about 50 cents. But in Bangladesh, the unit labour cost is only 22 cents. This gives Bangladesh a competitive advantage over countries, including India. Experts are of the view that Bangladeshi RMG exports have the potential to achieve the $100 billion mark in the next decade or so.

“Bangladesh has made tremendous progress in RMG exports,” says Sanjay Jain, chairman, ICC National Committee on Textiles & immediate past chairman, Confederation of Indian Textile Industry. “It has aptly shown how the right policy framework and its execution can transform an industry and help contribute significantly to the overall economy. The Bangladesh government has been quite proactive in putting up favourable policies and resolving the issues arising from time to time.”

While the Bangladesh RMG sector has always been under scrutiny, workplace safety in the industry has improved in recent years. Following the fire incident at Tazreen Fashions in 2012 and the Rana Plaza Building collapse in 2013, the government, with the assistance of the European and North American retailers’ initiatives (known as Accord and Alliance respectively), have implemented massive remediation programmes. Overall, the remediation efforts have enhanced workplace safety significantly in RMG factories.

The local industry has also worked on creating a favourable carbon footprint for itself. As per BGMEA, Bangladesh has 91 Leadership in Energy and Environmental Design (LEED) certified green garment factories, which is the highest in the world. The country is also home to the highest number of platinum-rated garment factories globally. As many as 25 Bangladeshi factories have achieved the highest certificate provided by the US Green Building Council (USGBC) with six out of the top 10 LEED certified factories worldwide situated there. About 500 more RMG factories have been registered with the USGBC for LEED certification.