Few months back, just before the onset of winter, I ordered two jackets online. Both belonged to the brand Allen Solly. One was a little bit costlier and the other was comparatively cheap. The products were received in due course of time. I have a habit of always checking the labels after I receive any product online. To my surprise, while one was manufactured in India, the other was manufactured in Bangladesh. By that time, doldrums in Bangladesh had already started and mental and physical torture on Hindus were on the rise and became a routine. Invariably, I became furious and my blood started to boil. I started to think why should an Indian brand, Allen Solly, which is owned by Aditya Birla Group, have their manufacturing facility outsourced from Bangladesh. Then I realized it is all about business where nationalism takes a back seat.
When I cooled down, I started to think what could be the pressing factors that made Aditya Birla outsource a portion of their manufacturing to Bangladesh. As a practicing cost accountant, I tried to figure out what could be the cost advantage to Bangladesh vis-à-vis India that an India company favored Bangladesh with the manufacturing activities which could have been easily undertaken in India? As I studied, I gathered knowledge about certain cost advantages for the Bangladeshi garment manufacturing industry and I also realized India had a very big role to play to offer such cost advantage to Bangladesh.
However, that cost advantage to Bangladeshi garment manufacturing industries had drastically been curtailed with just one stroke of a decision made by the Indian Government where a restriction has been imposed on the transshipment facilities enjoyed by Bangladesh for exporting their manufactured garments to various countries at a lower logistics cost using Indian ports.
Not very long back, the Bangladeshi garment manufacturing industry gained significant global traction due to several cost advantages and India, despite being a competitor, also played a supporting role, especially in logistics and supply chain infrastructure.
In terms of cost advantage, Bangladesh has some of the lowest wages in the garment-producing world. In 2023, the monthly minimum wage was around $95 (approximately INR 7,790), much lower than what was prevalent in India, Vietnam, or China. This kept per-unit production costs very low, especially in labour intensive garments like T-shirts, shirts, and trousers. In addition, Bangladesh, as a Least Developed Country (LDC), enjoys duty-free access to the EU, Canada, Australia, and some other countries under the Generalized System of Preferences (GSP).
Over and above, Bangladesh focused on volume-based production of basic wear like T-shirts, jeans, undergarments etc. which allowed for economies of scale and the manufacturing process being less complex, it made training cheaper and faster. There were also clustered industrial zones in Dhaka, Chittagong, and Narayanganj which reduced internal logistics costs. Moreover, earlier in its growth phase, Bangladesh had relaxed labour and environmental compliance enforcement which reduced operational costs but nonetheless raised some ethical concerns.
As stated, even though India and Bangladesh are competitors in the global garment trade, India has been a vital enabler for Bangladesh’s supply chain, especially in respect of supply of raw material like cotton and yarn. India is one of the largest cotton producers globally and Bangladesh imports 50–70% of its cotton and yarn from India. Since these two countries are geographically close, it becomes cost-effective. Indian ports like Kolkata and Petrapole serve as major transit points for these materials.
Indian companies also export textile machinery, dyes, and chemicals used in garment production which reduces Bangladesh’s dependency on distant suppliers like China or Europe. India’s land ports serve as critical trade points and improved bilateral trade agreements and infrastructure investments like BBIN corridor, enhance speed and cost-efficiency of cross-border trade.
For some of Bangladesh’s export shipments, Indian ports like Kolkata and Haldia are used for transshipment, particularly when Chittagong Port faces congestion. Moreover, India has helped Bangladesh meet energy demands via cross-border electricity trade, which supports the energy-intensive textile industry.
However, since Dr. Yunus took over charge of Bangladesh after a significant political upheaval in July and August 2024 which resulted into ousting of Prime Minister Sheikh Hasina and minorities there, particularly Hindus started to face a torrid time, the bilateral relationship between India and Bangladesh started to show strains and most of the triggers were from Bangladesh only. However, the last nail on the coffin was the very controversial and provocative statement of Dr. Yunus during his visit to China where he said that “Seven states of India, Eastern part of India called seven sisters, they are landlocked country. They have no way to reach out to the ocean. We are the only guardians of the ocean in this region. This opens up huge possibilities. This could be an extension of the Chinese economy – Build, produce and market things, bring it back to China, export to the rest of the world.” This evoked sharp response from the Chief Minister of Assam Dr. Himanta Biswa Sarma and the Royal Scion and Founder of the Tipra Motha Party, Pradyot Kishore Manikya Debbarma of Tripura.
This was enough for India to press the button and India’s Central Board of Indirect Taxes and Customs (CBIC) officially withdrew the transshipment facility for Bangladeshi export cargoes via its land borders, effective April 8, 2025. This decision rescinded the 2020 circular that had permitted Bangladeshi goods to transit through Indian land customs stations to seaports and airports for onward shipment to third countries. The reasons for the withdrawal were stated to be logistical congestion because of Bangladeshi consignments which resulted in delays, increased air freight rates, and reduced capacity for Indian exports, particularly in the apparel sector. Indian exporters raised concerns that the transshipment of Bangladeshi goods was prioritizing foreign cargo over domestic shipments, leading to losses to Indian exporters.
The withdrawal of the transshipment facility is expected to disrupt Bangladesh’s export trade, especially in sectors like readymade garments, and increase logistical costs for exports to countries such as Nepal, Bhutan, and Myanmar. Bangladesh relies heavily on its garments manufacturing industries which account for more than 80 percent of its export. Experts have also noted that this move could strain regional trade cooperation and may raise concerns regarding compliance with World Trade Organization rules on transit freedom for landlocked countries. However, India has exempted Bangladeshi exports to Nepal and Bhutan as such trade facilitation is mandatory for landlocked countries under the framework of provisions of the World Trade Organisation (WTO).
In further retaliation, the Bangladesh government has banned import of yarns from India to the country via land ports through a notification from the National Board of Revenue. The notification states import of yarn has been banned through the land ports at Benapole, Bhomra, Bangabandha, Burimari and Sonamasjid with immediate effect. Import from air and sea routes are still permitted. However, this further jeopardizes the already fragile sector in respect of cost disadvantage and makes the future of the textile industry in Bangladesh more uncertain. Chittagong, which houses most of the textile industries is in turmoil over religious issues and Dhaka is witnessing violent protests against low wages. These are not making things better either. Bangladesh which was once the second largest exporter of textiles with China on top, now losing the ground under its feet very fast mainly because of the arrogance, vindictiveness and short sightedness of its political establishment, religious extremism and disrespect for law and order.
Simultaneously, this move will benefit Indian domestic exporters and textile industries and units which are mainly in Tirupur in Tamil Nadu are witnessing sudden surge in export order book. International apparel brands suspect disrupted supply chain from Bangladesh and are obviously looking up to India for a steady and uninterrupted supply. Fortunes are also opening up for industries in Surat, Ludhiana, Jaipur and Noida.
This move by India may or may not have impacted the arrogant and stubborn Dr. Yunus but it has hit where it hurts. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has formally requested the Indian government to withdraw this decision saying that Bangladesh and India are neighbors and are good partners. He also said that Bangladesh imports huge quantity of their fabrics, dyes, chemicals, machinery and yarns from India and India should acknowledge that. He reiterated that Bangladesh has good relationship with India.
All said and done, people should understand that in the present times, international trade does not survive on nonsensical emotions. Apart from strong economics and cost management, it needs a stable, understanding and visionary political dispensation. Bangladesh is a prime example of a country which digs its own grave. The political class and the common people both are partners in this crime. The sooner they understand it, the better. But the chances seem to be slim. Till the time, let India make a fortune out of it.
But at the end, the biggest question it, should I throw away my jacket which has a label of my dislike?
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