Supply crunch hits Indian RMG retailers after Bangladesh land export curbs
Bangladesh plays a crucial role in supplying affordable apparel to India
Major Indian fashion retailers are grappling with supply shortages nearly three months after New Delhi restricted the import of readymade garments from Bangladesh through land routes.
Brands such as Marks & Spencer, H&M, Zudio, and Lifestyle are facing delays in replenishing merchandise, with the impact most visible in the affordable fashion segment, according to a report by Indian news portal Business Standard.
On 17 May this year, India's Directorate General of Foreign Trade (DGFT) issued a directive limiting garment imports from Bangladesh to just two seaports – Kolkata and Nhava Sheva (Mumbai). Previously, most consignments entered India through land ports, ensuring faster turnaround. The new policy has slowed shipments by two to three weeks, particularly affecting products priced under ₹1,000.
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As per Indian industry data, garment imports from Bangladesh have already fallen by about 25% year-on-year. The disruption comes just ahead of India's festive season, between September and November, when consumer demand peaks during Diwali, Durga Puja, Navratri, and other festivals.
India halts import of Bangladeshi garments, processed foods via land ports
Retailers typically rely on continuous fresh supplies to boost sales in this period.
Bangladesh's role in India's apparel market
Bangladesh, the world's second-largest garment exporter after China, plays a crucial role in supplying affordable apparel to India.
The Confederation of Indian Textile Industry (CITI), cited by The Hindu, estimates that India annually imports garments worth ₹5,000-₹6,000 crore from Bangladesh, much of it for mass-market retail.
Between January and June this year, India imported $254.44 million worth of apparel from Bangladesh, 3.5% higher than the same period last year, according to International Trade Centre (ITC) and CITI figures.
In 2024, imports totalled $634 million, growing at a compound annual growth rate of 19% over the last decade. Although sourcing within India has increased, categories previously dependent on Bangladeshi imports are still experiencing delays.
Meanwhile, India's own garment sector faces headwinds after US President Donald Trump imposed a 50% tariff on apparel imports from New Delhi.
Smaller traders bear the brunt
The Clothing Manufacturers Association of India (CMAI) has projected sourcing costs will rise 3-5% due to higher shipping charges, Business Standard reported.
While larger retailers are better placed to cushion the blow with advance orders, smaller traders and grey-market operators, who rely on low-cost, quick shipments, are struggling the most.
Why the restrictions?
According to the Business Standard report, the restrictions followed controversial remarks by Bangladesh's Chief Adviser Muhammad Yunus during his China visit, when he described India's northeastern states as "landlocked" and highlighted Bangladesh's position as their access point to the sea.
Yunus presented this as a potential opportunity for Chinese economic engagement in the region.
The statement was sharply criticised by Indian politicians across party lines, who deemed it provocative and harmful to regional trust, the report said.
However, the DGFT did not cite a specific reason for the curbs.
Relations between the two neighbours had already soured after ousted prime minister Sheikh Hasina fled to India on 5 August 2024. New Delhi has since voiced repeated concerns over Dhaka's handling of attacks on Hindu minorities, further straining ties.
Despite tensions, trade links remain significant. Bilateral trade reached $12.9 billion in 2023-24, with India exporting $11.46 billion to Bangladesh in 2024-25, while imports stood at $2 billion.
