Bangladesh seeks to set up garment warehouse in Gujarat to market across India

A business team comprising representatives from Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Cotton Association lead by Abdul Matlub Ahmad, president of the Federation of Bangladesh Chambers of Commerce and Industry visited the Indian state of Gujarat to select a garment warehousing site that will be constructed by Bangladeshi entrepreneurs to boost exports to India.

They visited public and private sites in Gujarat and discussed with government high-ups and top businessmen in Gujarat ways to establish a warehouse to market clothing items across India and set up garment and yarn factories.

Ahmad said that the Indian government has accepted Bangladesh’s proposals and agreed to allocate lands to establish the business hub in Gujarat. Bangladesh looks to establish the hub as the country seeks to boost its annual garment exports to the Indian market to $1 billion in three years from about $100 million now.

Bangladesh has been trying to sign a deal with India for many years now to maintain a steady supply of cotton to Bangladesh as India sometimes stops the supply of the fibre without prior notice. As a result, Bangladesh’s textile and garment sectors face troubles. So, they have proposed to establish some yarn manufacturing units in India so that they can spin yarn from cotton and send it back to Bangladesh for a steady supply of the raw material.

The warehouse, garment factories and spinning mills would be constructed and operated by Bangladeshi entrepreneurs, India will only allocate the lands. It is also an opportunity for India to receive foreign direct investment and create jobs, Ahmad said.

On the restriction by Bangladesh Bank on investing abroad, Ahmad said that the government is now much more liberal as its foreign currency reserves are close to $27 billion.

The BGMEA had demanded the 50 acres of land in India to establish the warehouse during Indian Prime Minister Narendra Modi’s visit to Dhaka in June.

Demand for Bangladeshi garments is high among the growing middle class in India thanks to lower prices. India is a big market for them, with an annual retail size of over $40 billion for the growing middle-class consumers, said Reaz-Bin-Mahmood, vice-president of BGMEA.

Although India provided a duty and quota-free market access for all Bangladeshi goods, except 25 alcoholic and drug items, in 2012, it levied a 12.5 percent countervailing duty on garment items in the following year that hampered apparel exports to India.

According to data from the commerce ministry in fiscal 2014-15, Bangladesh exported garment items worth $104.25 million, rising from $96.26 million in the previous year.