Bangladesh Textile Industry: Bird’s Eye View
Bangladesh is the world’s second largest apparel manufacturer after China and hence become home to more than 5,600 garment factories. About 60% of clothes end up in European markets – on the whole, apparel exports generates almost $20 billion in annual revenues and is the largest source of foreign exchange earnings.
Cluster Size of Textile Industry:
Major products exported from Bangladesh include polyester filament fabrics, man-made filament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns. Major garments exported include knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters and sportswear, among other fashion apparel.
Spinning mills remains critical to RMG value chain however, it is highly dependent on raw material mainly from India and China. The products of the spinning sub-sector are cotton yarn, polyester, synthetic yarn, woolen yarn and blended yarn mixed of cotton and polyester of different counts (mostly up to 80 count).
Weaving sector – The unit account to only 40% of the total fabric demand for garment production. Hence garment exporters have to import fabrics.
Knitting and hosiery sectors produces different types of products such as undergarments, socks, stockings, and so on. Factories have upgrade in recent times to cater the international market. However, there is scope of improvement in terms of quality.
Ready Made Garments (RMG) – RMG is the highest foreign currency earner in Bangladesh. Around 2 million people are involved in around 3200 garment sector. There is a need of three million skilled workers to increase annual export revenue from the current level of $25 billion to $50 billion in next five years.
It is facing major competition in free market environment from its competitors like India, Pakistan, Thailand, Malaysia and other countries, who are producing quality fabrics. There is shortage of woven fabric supply less than 19% of the total requirement. However, 70% of the Knitted fabric requirement is produced domestically. The government is discussing to lower corporate tax on the readymade garment (RMG) sector from the current rate of 35%.
Trade:
Generalised Scheme of Preferences (GSP):
European customers mostly buy garments made from local yarn as that gives duty preferences. These garments include T – shirts, polo shirts, hoodies, undergarments, sleepwear and mostly knit fabric items. In cotton, Chief Value Cotton (CVC), Chief Value Synthetic (CVS) poly viscose, poly nylon, woven cotton, T/C N CVC (Textron Cotton and Chief Value Cotton) twill, canvas, denim, sheeting , poplin, trousers, shorts, skirts and jackets.
Major Markets:
Bangladesh sources its raw materials mainly from China and India
Apparel exports have been concentrated on two major destinations – the European Union and North America. It is encouraging to note that over the last five years, remarkable progress has been achieved in diversifying our exports to non-traditional markets. This diversification and growth of export destinations is a healthy sign. Over the last five years, there has been a significant rise in exports to Japan, China, India, South Korea, South Africa, Russia, Brazil, Mexico and Chile.
Bangladesh is exploring new markets like Japan, South Africa, India, China, Korea, Malaysia, a bit in Singapore, Australia and Brazil.
Compact yarn market is considered to be profitable market in near future.
SWOT Analysis:
| Strength Extended GSP facility up to 2017 (renewed recently)Low cost of captive power generation using gas as fuelEfficient and effective workforce as well as low labour cost | Weakness Backward linkage industryExternal raw material supplyErratic Power supplyHigh bank interest rate for export oriented high valued projectsCost of doing business is high |
| Opportunity By increase in productivity & quality, Bangladesh can minimize cost and maximize profit and export value – it can be the next apparel sourcing number one hotspot | Threat Physical infra structure of garments factoryNot much concern on human such as lack of safety measures and so on |
EXIM Analysis:
Top 20 products exported from Bangladesh (in 2014)
| Rank | HS Code | Product |
| 1 | ‘5307 | Yarn of jute or of other textile bast fibres |
| 2 | ‘6109 | T-shirts, singlets and other vests, knitted or crocheted |
| 3 | ‘6110 | Jerseys, pullovers, cardigans, knitted or crocheted |
| 4 | ‘5303 | Jute & other textile bast fibers (not flax, true hemp, ramie), raw |
| 5 | ‘6310 | Rags, scrap twine, crodage, rope |
| 6 | ‘6305 | Sacks and bags of a kind used for the packing of goods |
| 7 | ‘6205 | Men’s shirts |
| 8 | ‘6302 | Bed, table, toilet and kitchen linens |
| 9 | ‘6104 | Women’s suits, dresses, skirt & short, knit/crocheted |
| 10 | ‘6105 | Men’s shirts, knitted or crocheted |
| 11 | ‘6111 | Babies’ garments, knitted or crocheted |
| 12 | ‘6306 | Tents & camping goods, tarpaulins, sails for boats, etc |
| 13 | ‘5607 | Twine,cordge &cable, with rubber/plastic |
| 14 | ‘6106 | Women’s blouses & shirts, knitted or crocheted |
| 15 | ‘6201 | Men’s overcoats, capes, wind jackets |
| 16 | ‘5202 | Cotton waste (including yarn waste and garnetted stock) |
| 17 | ‘6202 | Women’s overcoats, capes, wind-jackets |
| 18 | ‘6209 | Babies’ garments and clothing accessories |
| 19 | ‘6210 | Garment made up of fabric of heading no 56.02,56.03,59.03,59.06/59.07 |
| 20 | ‘6307 | Made up articles nes, including dress patterns |
Source: ITC
HS 5205: Bangladesh Total Imports & Top 3 Exporters
| Country | 2011 | 2012 | 2013 | 2014 |
| Total Quantity | 185072 | 203229 | 213587 | 236982 |
| India | 120803 | 135642 | 147446 | 158466 |
| Pakistan | 32689 | 31891 | 31510 | 38602 |
| China | 18678 | 22505 | 27124 | 22112 |
Source: ITC; Quantity in Tons
HS 5205: Bangladesh Total Imports & Top 3 Exporters
| Country | 2011 | 2012 | 2013 | 2014 |
| Total | 62235 | 63881 | 91865 | 110482 |
| Malaysia | 5112 | 6533 | 5281 | 8416 |
| Thailand | 11744 | 7668 | 10373 | 7804 |
| Korea | 2409 | 1981 | 2983 | 3821 |
Source: ITC; Quantity in Tons
Economy:
Textile industry plays a key role in Bangladesh’s economy, accounting for industrial employment of 45% and contributing to total national income of 5%. Country’s major apparel exports are to United States, European Union (EU) & Canada. It is expected that the industry’s contribution to GDP will increase to 33% (presently 29%).
Bangladesh is expected to emerge out as world’s fastest growing economy, with GDP growth of 6.7%. Exports accounts for 20% of GDP, while clothing exports contribute to around 80% of total exports. EU is the major recipient of garments, accounting to 61% of the exports.
Today, the textile industry of Bangladesh has a stylish name all over the world. The textile business is seeing immense growth and may dominate in the world market like America, Europe, Australia, Africa sub-continent and so on.
