Bangladesh’s Import Surge from India Amidst Global Supply Chain Pressures
Bangladesh’s imports from India are rising, especially in textiles, due to challenges in reducing lead times from other countries. Data show an increase to $2.36 billion in late 2024, with cotton imports significantly driven by the ease and speed of sourcing from India. Despite larger imports, Bangladesh’s exports to India remain sluggish, highlighting an imbalance in trade relations between the two nations.
Bangladesh’s reliance on imports from India has intensified as domestic manufacturers endeavor to reduce lead times for goods from alternative sources. Competing globally necessitates efficient supply chains; hence importing from China, Latin America, or Africa compromises competitiveness. Significant quantities of Indian goods, particularly cotton and fabrics, have been imported since July of the previous year due to disruptions affecting production.
According to data from Bangladesh Bank, imports from India rose by 2.09 percent, reaching $2.36 billion in the October to December quarter of 2024, a notable increase from $2.04 billion the previous year. In the fiscal year 2024, total imports from India amounted to $9 billion, declining slightly from $9.94 billion in fiscal year 2023. The import value for the first half of the current fiscal year remained consistent, at $4.41 billion, suggesting that this figure may exceed last year’s.
Cotton represents a significant portion of these imports, with Bangladesh importing over $3 billion annually; more than half of this quantity originates from India. The fiscal year 2024 recorded Indian cotton imports at $2.36 billion, an increase from $1.92 billion in 2023. Additionally, other notable commodities include cotton yarn, fabrics, and various chemicals.
Trade officials attribute the rise to increased exchanges through formal trade channels, while informal trade has notably diminished due to stringent border controls. More importantly, the proximity of Indian imports facilitates quicker delivery, which is essential in a competitive environment.
Following the Covid-19 pandemic and geopolitical tensions, international clothing retailers have significantly reduced lead times. This shift reinforces the need to source materials efficiently; importing cotton from afar delays delivery to manufacturers by an extended period, while Indian suppliers can deliver in just two to three days at competitive rates.
Previously, imports of Indian cotton faced declines, with Bangladesh sourcing less than 30 percent from India due to unpredictable trading patterns. However, current dynamics reflect a reversal, highlighting a resurgence in the demand for Indian textiles as local manufacturers have limited alternatives.
Showkat Aziz Russell, president of the Bangladesh Textile Mills Association, noted the industry’s renewed dependency on Indian goods due to evolving global trade patterns. Emphasizing the critical nature of timely imports and cost-effectiveness, he remarked on the essential role of Indian textiles in the Bangladeshi market.
The joint secretary general of the India-Bangladesh Chamber of Commerce and Industry, Md Abdul Wahed, reported that trade is currently facilitated through 24 land ports, three rail ports, airports, and seaports. Improved security has also curbed informal trade avenues. Furthermore, institutional challenges in foreign banking have exacerbated reliance on Indian imports.
Md Abdul Razzaque, chairman of the Research and Policy Integration for Development, articulated that India serves as a vital source of industrial raw materials, being second only to China. Geographical closeness and cultural familiarity also enhance trade relations. The Ministry of Commerce and Industry of India identifies the primary imported commodities as cotton, manmade fibers, and textiles.
Conversely, despite these import increases, Bangladesh has struggled to fully utilize its duty-free trade opportunities with India, exporting a mere $970 million in goods, primarily garments, in the first half of the fiscal year. Exports totaled $1.56 billion in fiscal year 2024, a decline from the previous year.
In conclusion, Bangladesh’s increasing dependence on Indian imports, particularly in textiles and raw materials, is driven by the necessity for shorter lead times amidst global supply chain challenges. The figures indicate a clear upward trajectory in imports, reflecting a shift back to regional sourcing following disruptions from external factors. This reliance underscores the interplay of logistical efficiency, cost factors, and the geopolitical landscape influencing trade dynamics in the region.
Original Source: www.thedailystar.net
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