“This crisis also presents an opportunity for additional employment generation. Capturing just 10 percent of Bangladesh’s global apparel exports could directly create 5,00,000 jobs and indirectly generate an additional 1 million jobs in the Indian apparel sector. To seize the opportunity presented by this development, India needs to urgently address issues related to capacity augmentation and skill development,” Thakur said.

Most European brands sourcing from Bangladesh, particularly in the cost-sensitive segment, are facing challenges in immediately shifting orders to alternative destinations, due to the distinct cost advantages offered by the country, such as low wage rates, duty-free access, and its Least Developed Country (LDC) status. However, several prominent brands have decided not to further increase their exposure to Bangladesh for sourcing, Thakur added. Notably, Bangladesh enjoys a 10-15 percent cost advantage over India, as its apparel products benefit from duty-free access in the European Union, the UK, and Canada due to its LDC status.

India can only bridge the duty disadvantage after it signs a free trade agreement with the EU and the UK. Currently, several Indian manufacturers have set up factories in Bangladesh due to India’s labor laws, concerns about unions, and the cost disadvantage.

On Vietnam, Cambodia vying for investment:

Thakur further said that global investments are driven by the political stability index, and the continued instability in Bangladesh presents a significant opportunity for India to attract investments that might otherwise flow to neighboring competing countries such as Vietnam, Cambodia, and Indonesia.

“However, with a strong focus on improving and upgrading infrastructure, capacity expansion, technology infusion, and compliance, India is well-positioned to capitalize on these redirected investments. We are also in talks with agencies and consulting firms to engage them in improving productivity and efficiency in the operations of garment manufacturing companies, which can unlock the underutilized production capacity in the apparel sector,” Thakur said.

On PLI 2.0:

To capture market share and seize the opportunities arising from the reorientation of supply chains due to Bangladesh’s crisis and the China+1 factor, India must act swiftly to enhance its production capacity, shorten production cycle times, and improve speed to market, in addition to focusing on workforce skilling and developing a robust compliance architecture, Thakur said.

“Accordingly, the PLI 2.0 scheme for all types of garments, irrespective of fiber, with a reduced investment threshold, should be introduced on an urgent basis. This scheme would foster investment and scale up production capacity exponentially. For micro-industries, the Amended Technology Upgradation Funds Scheme (ATUFS) should be revived for technology upgradation, as PLI 2.0 will not cover micro-industries within its scope,” he said.

On challenges in input material imports:

Thakur stated that due to the unavailability of quality Man-Made Fiber (MMF) fabric from indigenous sources, garment exporters are often dependent on fabric nominated by foreign buyers. He added that the “existing scheme of special advance authorisation” for fabric import is “not suitable for garment exporters” due to ever-changing market dynamics, designs, patterns, shapes, sizes, geography-specific consumption norms, and fast-changing fashion. .

“India’s garment export sector relies heavily on imported textile machinery to maintain quality and global competitiveness, as domestic machinery production is insufficient to meet demand. High import duties on machinery increase production costs, particularly following the withdrawal of most end-use duty exemptions, making Indian garment exports less competitive compared to countries like Bangladesh and Vietnam,” he said.

AEPC has therefore requested the Finance Ministry to reduce the current customs duties on textile machinery to zero, in addition to continuing the existing exemptions, to enhance the sector’s efficiency.

With the growing emphasis on ESG (Environmental, Social, and Governance) compliance in key overseas markets, particularly in the EU and the US, it is crucial for India to prioritize the upgradation of sustainability-compliance related infrastructure.

On Bharat Tex & expansion of exports:

Bharat Tex 2024 has emerged as a pivotal event for India’s textile industry, as this four-day event attracted 3,000 buyers from 111 countries, including renowned global brands such as Tommy Hilfiger, Calvin Klein, Vero Moda, Jack & Jones, H&M, Target, and IKEA, Thakur said.

“The presence of these global giants underscored their growing confidence in India’s textile sector. Deeper engagement of foreign buyers with the Indian textile industry during the event has contributed to the apparel sector’s recent double-digit growth during this fiscal year, despite adverse global market conditions and geopolitical challenges,” he added.