Bangladesh attracts Indian garment makers

Hit by declining sales, low export orders, rising manufacturing

costs and bad infrastructure facilities, Indian garment exporters are setting up factories in Bangladesh to take advantage of the low labour cost. According to Indian exporters, apparel manufacturing costs in Bangladesh are 60 per cent of those in India despite the infrastructural inadequacies. With orders from the US and EU declining or importers asking for cost cuts, it makes a significant difference to manufacturing costs for Indian exporters to manufacture in Bangladesh.

According to Bangladesh Board of Investment, Indian garment makers have invested about $79 million in 35 factories in Bangladesh so far. Over the past decade, apparel manufacturers from India and China have been steadily losing share in this labour-intensive business to Bangladesh, where companies pay very low wages compared to India and China.

In addition to lower labour costs, Bangladesh's clothing exports don't face taxes in at least 37 countries, including EU, Canada and Australia, a facility given to the world's poorest countries. A CRISIL study reveals, garment sales from India attract import duties of 8-10 per cent in these countries. Today, with a 4.5 per cent share in world garment exports, Bangladesh has overtaken India, which has a 3.5 per cent share. Garment sales comprise 80 per cent of Bangladesh's exports, with export-processing zones enjoying subsidized power supply.