Bangladesh has some ready-made lessons for India
Readymade garment exports of Bangladesh fell 18.1% to $27.95 billion in FY20 due to the unfavorable impression of covid-19. But, it continues to export extra readymade clothes than India. What can India be taught from Bangladesh on this entrance? Mint takes a glance.
When did Bangladesh’s exports overtake India?
This occurred in 2006-07, when Bangladesh exported readymade clothes price $9.21 billion and Indian exports stood at $8.89 billion. In 2019-20, readymade garment exports of Bangladesh fell 18.1% to $27.95 billion, whereas that of India fell by 4% to $15.48 billion. As per a paper titled What explains India’s poor efficiency in clothes exports? by Saon Ray of Indian Council for Analysis on Worldwide Financial Relations (ICRIER): “Bangladesh produces easy attire comparable to t-shirts, shirts in bulk… Whereas India manufactures superior high quality woven and knitted merchandise.” Covid has hit low-end exports extra.
How did Bangladesh grow to be aggressive?
One of many main causes for Bangladesh’s competitiveness is that it’s cheaper to supply items in Bangladesh than in India. In line with a working paper titled Automation and Way forward for Garment Sector Jobs: A Case Research of India written by Pankaj Vashisht and Nisha Rani of ICRIER: “The unit labour value of manufacturing a cotton shirt in america is round $7, whereas the unit labour value of manufacturing the identical shirt in India comes at round 50 cents, whereas in Bangladesh the unit labour value is just 22 cents.” This offers Bangladesh a aggressive benefit over the remainder of the nations, together with India.
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What helps Bangladesh in producing low cost items?
In line with the Financial Survey of 2019-20: “Bangladesh… [has] greater than 80% of market worth of exports by massive enterprises, India has 80% by small enterprises.” Readymade garment exporters in Bangladesh, due to this fact, have economies of scale. Additionally, Bangladesh’s exports to the European Union and Canada are largely duty-free.
Why do Indian garment exporters lack scale?
As T.N.Ninan writes in The Flip of the Turtoise: “Inflexible legal guidelines stop flexibility in manning for a seasonal trade… India has solely three or 4 garment makers with turnover in extra of $100 million.” Therefore, the turnaround time of Indian companies from order to supply is 63 days. In Bangladesh, this turnaround time is much much less at 50 days. Additionally, it takes solely in the future for a consignment to succeed in a port in Bangladesh. In India, it may possibly take as many as 10 days for a consignment to succeed in a port. All such elements are boundaries to creating scale.
What can India be taught from Bangladesh?
With the intention to enhance exports of readymade clothes, Indian companies should develop larger. Additionally it is price noting that if there are extra jobs within the clothes sector, it should present a working alternative for girls. Rising employment for girls leads to a number of advantages. Because the Financial Survey of 2016-17 factors out: “In Bangladesh, feminine training, whole fertility charge, and girls’s labour pressure participation moved positively resulting from enlargement of the attire sector.”
Vivek Kaul is the writer of Dangerous Cash.