Bangladesh’s exports to South Asian nations are rising, as the country’s RMG sector works towards diversifying its export basket.
India’s zero-duty benefit for most Bangladeshi items aided the growth, particularly in the last fiscal year, when overall exports to eight countries in the region grew 53% year-on-year to US$ 2.28 billion, during 2020-21 fiscal.
The demand for garments made in Bangladesh has been growing in Indian and Nepalese markets on the back of their expanding middle-income population.
Moreover, sourcing is on the rise by foreign retailers and brands like Walmart for Indian markets and by the neighbouring country’s domestic retailers and brands such as Reliance and Aditya Birla, said exporters.
India alone accounted for US$ 1.99 billion or 87% of the total exports receipts from the South Asian Association for Regional Cooperation (Saarc) in fiscal year 2021-22, showed data from the EPB.
Asian countries such as India, Japan and China are the target markets for Bangladesh as the country is set to lose its preferential market access in 2026 following its graduation from the group of least-developed countries.
Previously, the country’s exports to the region were mainly confined to formal woven shirts. Now, garment manufacturers send inner garments, denim and causal knitwear products apart from other consumer goods.
With the buoyancy in export growth to the region, the Saarc region’s share in Bangladesh’s total exports of US$ 52 billion grew by one percentage point to 4%, said the EPB. From basic to polo shirts, casual and formal dresses are the main export items to the Saarc nations.
Bangladeshi exporters believe jackets are going to be the next major export item to Nepal because of the relatively colder weather and lengthy winter season in the Himalayan nation.
Shipments to Nepal and Pakistan were also encouraging. Bangladesh exported goods worth more than US$ 105 million each to Nepal and Pakistan in FY22.
South Asia is the least-integrated region in the world and despite being one of the most populous regions, intra-regional trade sits at less than 5% of its total trade, according to a World Bank study.
Border challenges mean it is about 20% cheaper for a company in India to trade with Brazil instead of a neighbouring South Asian country, it said.
Trade has been limited by several factors, such as inadequate roads and marine and air transport, protective tariffs, real and perceived non-tariff barriers, restrictions on investments and a broad trust deficit throughout the region, it added.
Inter-regional trade stands at 35% in East Asia and 60% in Europe.