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Punjab textile industry feeling the chill wind of Bangladesh crisis

As the winds of change are blowing through Bangladesh, many businesses are feeling the chill wind of the job-quota crisis in Dhaka that had culminated in the resignation of former Prime Minister Sheikh Hasina, and her subsequent fleeing from the country. The unrest has taken a toll on the textile industry in India, especially in Punjab.

Garment factories, which supply apparel to India, have remained closed since the crisis in the neighbouring country. Bangladesh is a big market for readymade garments for which they import cotton yarn from India. But since the crisis unfolded, trucks containing yarn and other products are either stuck at the Bangladesh border or asked to return, as only essential items (like wheat, rice, etc) are given the green light to enter Bangladesh. The supply of readymade garments by Bangladesh to India has also been put on hold for now, which has affected the textile business in India, particularly in Punjab.

In Punjab, the textile industry is largely operational in Ludhiana, Malerkotla, Amritsar, Bathinda, and Mohali, among others. The other pockets in India that are feeling the heat are Tiruppur (TN), Coimbatore (TN), Ahmedabad (Gujarat), Gurugram (Haryana), and West Bengal, among others.

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“Bangladesh imports cotton yarn mainly from India and supplies readymade garments to the country. Bangladesh also imports acrylic yarn but Indian market is mainly meant for cotton. The yarn suppliers in India are not able to deliver goods to Bangladesh because of the tense situation in that country. We hope that the situation will normalise in a few days as the interim government has been formed,” said Sudarshan Jain, president, Knitwear and Allied Machinery Association of Ludhiana, while talking to The Indian Express.

As per the data from the Union ministry of commerce and industry, the export of cotton yarn from India to Bangladesh in 2023-24 was worth Rs 16,173 crore.

Sources revealed that out of this around Rs 1,000-crore export of yarn is done from Punjab alone, as Ludhiana is the textile hub of the country.

“No doubt the big corporate houses which supply yarn are affected and the readymade garments are also procured mostly by corporates, so by and large the micro, small and medium enterprises (MSME) have remained unaffected due to this crisis,” said Ajit Lakra, president of Ludhiana Knitters’ Association.

It may be noted that as per the South Asia Free Trade Agreement, garments and other products from Bangladesh have a duty-free access to India and other countries. Many big corporate houses of India have their offices in Bangladesh and they even export products to other countries via Bangladesh to save export duty.

Didar Singh, former president of Ludhiana Goods Transport Association, said, “Our trucks containing yarn and other products were stuck at the Bangladesh border, and now we have got information that they are coming back, as products like sugar, wheat, rice are only allowed entry to Bangladesh. The problem is with non-essential items like yarn and others. We feel it is a temporary phase and it will get resolved soon.”

Manjinder Singh Sachdeva, from United Cycles Parts and Manufacturers’ Association, said, “Bicycle industry by and large is unaffected except for traders who import complete ready-to-ride bicycles.”

Onkar Singh Pahwa, MD of Avon Cycles, said, “Complete ready-to-ride bicycles must have been imported by local bicycle traders of West Bengal and around areas. But now, because of this crisis, India’s domestic bicycle industry can fill the gaps if such bicycles, if any, have stopped coming from Bangladesh.”

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Industrialists said that high-end bicycles manufactured in China are imported via Bangladesh to avoid paying duty (because of the free trade pact).

Sudarshan Jain added, “I feel that it is a temporary phase, but still if it has a lasting effect, the local manufacturers may get only the emergency supply orders. The cheap readymade garments could be made available from the neighbouring country only because of cheap labour and zero tax when they are sent from Bangladesh to India.”

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