Months of unrest and violence leading to change of the government in Bangladesh is still taking a toll on its economy and its geopolitical neutrality. Recent floods in August and October have further pushed the country to the wall, making food prices rise by 20% in recent months.
Bangladesh’s garment industry lost $400 million due to disruptions caused by the recent student-led revolution that ousted Awami League’s Sheikh Hasina as the premier. The country’s 3500 garment factories export readymade garments (RMG) worth $55 billion annually, making it second in RMG exports after China.
A recent report by the United States International Trade Commission (USITC) flagged concerns over the insatiable political environment in Bangladesh and chose India for some praise for political stability that makes it a credible and preferred apparel sourcing destination. However, India’s domestic market accounts for 80% of RMG production.
“Brands are more willing to source high-value or fashion items from India compared to less politically stable countries, as they are confident they will be able to produce and receive their products,” noted the USITC report.
The report recognizes India’s competitiveness in cotton-based garments. It also outlines some challenges, such as high labor costs, small production units, and costly logistics that restrict the scalability of India’s RMG industry.
The report notes that several garment exporters have gained market shares from China over the last decade. These countries are Bangladesh, Pakistan, Indonesia, and Cambodia. The US remains India’s biggest RMG export market, with its share increasing from 4% to 5.7% from 2013 to 2023. However, in the same period, Vietnam increased its share in US apparel imports from 10% to 17.8%, emerging as the biggest winner. What makes India, however, a dominant choice is the availability of most inputs domestically, making it a reliable supplier with a comprehensive value chain.
Another aspect that adds to the cup of woes for Bangladesh is the recent floods that destroyed about 1.1 million metric tons of rice. Bangladesh is ramping up rice imports even as food prices are escalating. The floods hit the country in two waves, first in August and second in October, claiming hundreds of lives, wiping out standing paddy crops, and displacing millions of people. Total agricultural loss due to flood is estimated to be $380 million. In response, the Bangladesh government has moved to import 500,000 tons of rice and is expected to give import permits to private businesses. India has been one of Bangladesh’s key trade partners. Last month, India lowered the duty on parboiled rice exports to 10%. Higher rice imports by Bangladesh could mean buying more from India, the top global rice exporter. Bangladesh is the world’s third-largest rice producer, with 40 million annual production.
Floods in Bangladesh have highlighted the country’s vulnerability to climate change. A 2015 World Bank Institute analysis shows that 3.5 million people in Bangladesh are at risk of annual river flooding. Scientists warn that this risk is increasing due to global climate change. plant-based supplement could help protect bees from pesticides.
“To ensure food security in the face of increasing climate challenges, it is essential to develop more flood- and drought-tolerant crop varieties, along with short-duration varieties,” said Khandakar Mohammad Iftekharuddaula, chief scientific officer at the Bangladesh Rice Research Institute.
Meanwhile, relations between India and Bangladesh remain cautious. On October 12, to the discomfort of New Delhi, Chinese navy ships docked in Bangladesh’s Chittagong port on a three-day goodwill visit. This is the first visit of Chinese naval ships to a Bangladesh port since the new interim government began to act under Nobel laureate Muhammad Yunus. India views the visit as part of the continuous Chinese build-up in Bangladesh.
China has stepped up its defence engagement with South Asian nations. China commissioned a submarine base in Bangladesh in March 2023 that can house two Chinese Ming-class submarines that Bangladesh has. It can also host Chinese research vessels whose activities in the Indian Ocean, particularly around Sri Lanka and Maldives, have increased, giving New Delhi more reasons to feel concerned. (IPA Service)