Indian Ready-made Garment Industry:
India is one of the biggest exporters of textiles and apparel in the world, the 6th largest as per the current ranking. Where the apparel and textile industry contributes to 5% of the country's GDP with 12% of the country's export earnings. This has made the textile and apparel sector a significant contributor to the country's economy. The technical textiles segment in the country is estimated at $16 bn, which is approximately 6% of the global market. It is one of the largest producers of raw cotton and jute and the 2nd largest producer of silk in the world, Bangladesh is one of the largest importers of raw cotton. The data also shows 95% of the world’s hand-woven fabric comes from India.
The Indian textile and apparel industry employs 45 million people and 100 million people in allied industries making the country the 2nd largest employer of the country. India has also become the second-largest manufacturer of PPE in the world with more than 600 companies certified to produce PPEs today, the segment's current global market worth is expected to increase over $92.5 bn by 2025, up from $52.7 bn in 2019.
Bangladesh Ready-made Garment Industry:
Bangladesh is today one of the world’s largest garment
exporters, with the RMG sector accounting for 84% of the total country's
exports. The growth of the industry was promoted after massive modernization
over the past decade and a stride in improving conditions for the country’s approximately four
million garment workers.
The sector saw a fiscal growth from 12.55 percent to $31.456 billion in fiscal 2020-21 ending June 30th in comparison to
exports of $27.949 billion in the previous fiscal, as per the provisional data
released by the Export Promotion Bureau. The data also showed that the country
missed its export target of $33.785 billion by 6.89 %. A comparison
category-wise shows growth in knitwear exports from 21.94 % to $16.960 billion
in July-June 2020-21 as compared to exports of $13.908 billion during the
previous fiscal, as per the data. The woven apparel exports showed growth by
3.24 % to $14.496 billion compared to exports of $14.041 billion for the year
2019-20. The total exports accounted for 81.16 %of $38.758 billion for the last
fiscal year.
The key difference between India and
Bangladesh Manufacturing industries are:
Labor Wage: Labor in India is relatively more
expensive. An Indian garment worker earns $257 per month, while a Bangladeshi
worker gets only $101.
Factory setup cost: Setup cost for 100,000
sq. ft. factory area in India rounds about $800,000 which when compared to
Bangladesh rounds about $500,000 as of 2010.
Lack of infrastructure: The most crucial
part of the textile and apparel sector is receiving deliveries on time. Lack of
infrastructure and excessive paperwork at ports of India leads to increased
transportation time of both raw materials and output, leading to an increase in
cost. In contrast, firms in Bangladesh are usually located in a port city.
Also, an electronics industry’s estimation shows that logistics, taxes,
infrastructure, and land costs are about 12 to 18 % higher in India compared
with Bangladesh.
Working hours: Working hours are 10 hours in
Bangladesh as compared with 8 working hours in India. It is also a key reason
why the production speed of Bangladesh is higher than in India.
Raw material availability: The textile
industry is the basis of the apparel industry for raw materials. Bangladesh
holds a more productive point here as the textile industries are readily
available in Bangladesh making raw materials available for apparel
manufacturers.
Country advantage: Since Bangladesh is an LDC (Least Developed Countries) it is allowed duty-free export. The country possesses an advantage in grabbing the global garments export market. Share of the industry in total exports: Total share of apparel exports in Bangladesh is 84% as compared to 12% of India's export earnings.
Exchange-rate of Rupee and Taka: Overvalued rupee affects the competitiveness of the textile sector as exports become more expensive. To add to that, Bangladeshi Taka is weaker than the Indian rupee making its exports cheaper. Hence when compared to an exchange rate with the US dollar the exchange rate is more stable in comparison with Indian Rupee.
Manpower
availability: Bangladesh getting
manpower more easily than India, as people tend to get involved in IT, sports, and others growing sectors in India. And labor cost also lower as well
Middle
Management competency/ Skills: Though Bangladesh is a very smaller country than India, Bangladesh
has a large number of skilled middle management employees having larger
production. Over 50 educational institutes in Bangladesh have graduation/ undergraduate degrees in textile and Fashion, which is make skill manpower for the garments industry.
Raw
Material sourcing: India is very much
ahead of Bangladesh on this side. For textile cotton, India is fully
self-dependent to source from its own country, where Bangladesh has to import all
raw materials. Bangladesh is also well behind in garments raw materials sourcing,
they have to depend on overseas nations, especially China, India, and Pakistan for sourcing fabrics. Even BD goes to Hongkong and China for sourcing some high-quality Trims and accessories. Most cases, especially some premium customers nominate all the materials suppliers, so BD has no other options to the source by themselves.