The apparel sector alone fetched $145.10 million, or nearly 35% of total export earnings. Knitwear products contributed $37.76 million, while woven items earned the remaining $107.35 million
Bangladesh’s exports to India have seen a sharp rise by 142% to $375 million in the first quarter of the current fiscal year, thanks to duty free market access. The earnings were $155 million in the same period last year, according to the data of Export Promotion Bureau (EPB).
The apparel sector alone fetched $145.10 million, or nearly 35% of total export earnings. Knitwear products contributed $37.76 million, while woven items earned the remaining $107.35 million.
Why exports rose sharply
Bangladesh has been enjoying duty free market access to India, attracting global retailers that are increasingly opening outlets in India. In addition, Indian clothing chains are importing more as they find it more competitive.
“Global retailers are opening more outlets in India, which is a big reason for the sharp rise. Also, production costs in India went up due to implementation of the Goods and Services Tax(GST) in India and local taxes for transporting goods from one state to another,” Mohammad Hasan, executive director of Babylon Group, a leading garment exporter, told the Dhaka Tribune.
As a result, imported goods, particularly apparel products, have become more profitable for Indian traders, as Bangladesh enjoys duty free market access to India, said Hasan.
“Such a sharp rise in a single market is a positive sign for Bangladesh, which indicates that exports have seen transition in the regional and non-traditional markets,” Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem said.
Due to major depreciation of the Indian rupee against the US Dollar, export earnings were supposed to see an adverse impact as the Bangladeshi Taka is stronger against US Dollar compared to the Indian rupee, said Moazzaem.
But exports to India have seen a significant leap, because of implementation of GST in India, as Indian local manufacturers of apparel products lost some competitive benefits from the government, which paved the way for enhanced imported goods, said the economist.
New markets are also opening in different provinces of India as they lack local manufacturing bases, creating improved demands for Bangladeshi goods, he added.
“In increasing export performance to non-traditional export destinations, the government is offering a 4% cash incentive for new markets, which was 3% last year,” Commerce Minister Tofail Ahmed told the Dhaka Tribune.
India has also given duty free market access for all Bangladeshi goods except alcohol and tobacco. This is a big push for the Bangladeshi manufacturers, he added.
“At the end of the fiscal year, I am very hopeful that Bangladesh’s overall export to India will reach the one billion-mark, “said the minister.
In FY18, Bangladesh earned $873 million from exporting goods to India, and $672 million in FY17, according to Export Promotion Bureau (EPB) figures.
In fiscal 2017-18, Bangladesh’s RMG exports to India stood at $279.19 million, up by 115% compared to $129.81 million in the FY17.
Meanwhile, business people urged Bangladesh government to initiate bilateral talks with the Indian government to explore more windows for Bangladeshi goods in the neighboring economy.
BGMEA senior vice president Faruque Hassan said the association has been trying to create an ecosystem in the Indian market for the last couple of years.
“India is granting duty free and quota free market access to Bangladesh, which is very good for your exports. Bangladeshi companies are getting very good and important opportunities to export to India,” Indian High Commissioner Harsh Vardhan Shringla said recently.