**Dhaka**: As global supply chain pressures tighten, Bangladesh is increasingly relying on India for imports, particularly in the readymade garment sector, with a notable rise in cotton imports. However, exports to India have declined, highlighting the need for improved product diversification.
Bangladesh is increasingly relying on India for various import needs as local manufacturers and exporters face pressing deadlines due to tightening global supply chains. The demand for quicker shipment times has become crucial, particularly in the readymade garment (RMG) sector, which represents a substantial segment of Bangladesh’s export economy.
The shift towards Indian imports is primarily driven by the need for efficiency. As lead times for international retailers and brands have reduced from 90 days to approximately 45 days, Bangladeshi businesses are actively seeking faster, more reliable suppliers for their raw materials. One notable advantage of sourcing materials from India is the significantly shorter transit time. While importing cotton and other essential components from regions such as Africa, Latin America, or the United States can extend upwards of 45 days, shipments from India can arrive within just two to three days. This reduction in delivery time is considered vital for Bangladesh to maintain its competitive edge in the global marketplace.
Recent data from Bangladesh Bank highlights a rise in imports from India, reflecting these trends. In the October to December quarter of 2024, imports from India increased by 2.09 per cent year-on-year, amounting to $2.36 billion, up from $2.04 billion during the same timeframe in the previous year. In total, Bangladesh’s imports from India for the fiscal year 2024 reached $9 billion, although this represents a slight decline from the $9.94 billion recorded in fiscal year 2023. The upward trend has resumed, with the first half of FY24 contributing an impressive $4.41 billion to this total.
Cotton emerges as a key driver of this trade relationship, with Bangladesh importing more than $3 billion worth of cotton annually, over half of which is sourced from India. The value of cotton imports from India alone soared from $1.92 billion in FY23 to $2.36 billion in FY24. Apart from cotton, Bangladesh is also importing considerable volumes of yarn, fabrics, textile chemicals, and handloom products from its neighbour.
Several factors have contributed to this deepening trade relationship. Political and labour unrest within Bangladesh’s textile industry, which disrupted operations in mid-2023, has led many manufacturers to seek more reliable sourcing options. Improvements in border security and infrastructure have also played a pivotal role, reducing informal trade and increasing the amount of goods transported through official ports—there are now 24 land ports and three rail ports in operation. Furthermore, the ongoing shortage of US dollars has made it challenging for Bangladeshi banks to facilitate letters of credit (LCs) with distant suppliers, thereby incentivising trade with India, owing to geographical proximity and easier financial arrangements. Language familiarity and comparable business practices between the two nations further simplify these commercial exchanges.
However, despite the increasing volume of imports, Bangladesh is facing challenges in successfully capitalising on duty-free trade opportunities with India. According to reports, exports from Bangladesh to India have fallen by 11.63 per cent in FY24, dropping from $1.77 billion to $1.56 billion. This decline is attributed to limited product diversification and a lack of export readiness.
As global supply chain pressures continue to persist, India’s position as a vital trading partner for Bangladesh is expected to expand. Nonetheless, for a more balanced and resilient trading relationship, Bangladesh will need to enhance its export capacity to India and diversify its product offerings, addressing the existing trade imbalance.
Source: Noah Wire Services
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