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A recent move by the Indian government to restrict imports from Bangladesh via land ports is poised to provide a significant lift to the domestic textile sector. Industry stakeholders estimated that this change in policy could generate over Rs 1,000 crore in additional business for Indian textile manufacturers, although it may also temporarily disrupt supply chains for some branded apparel products.

On Saturday, the Directorate General of Foreign Trade (DGFT) issued a notification prohibiting the import of garments and various other items from Bangladesh through land routes. However, the DGFT has permitted these goods to be brought in through two major seaports—Kolkata and Nhava Sheva. This decision comes in response to persistent calls from domestic players seeking protection against a surge in duty-free textile imports from Bangladesh.

Opportunities for Local Manufacturers

Industry leaders view this as a timely opportunity for Indian manufacturers to step in and fulfill domestic demand, which until now has been partly met through cheaper imports, reported The Economic Times.

"We were importing garments worth Rs 6,000 crore annually from Bangladesh. We can now expect imports worth Rs 1,000-2,000 crore to be replaced with Indian manufacturing," said Sanjay K Jain, chairman of the National Textile Committee, Indian Chamber of Commerce (ICC).

Prabhu Dhamodharan, convenor of Indian Texpreneurs Federation, echoed similar sentiments, saying, "With this move (ban on imports via land routes), the reduction in imports will help strengthen domestic production and support local manufacturers."

The industry believes that the new restrictions will also put an end to indirect imports of Chinese fabrics. These materials, typically subject to a 20 per cent import duty, were being routed through Bangladesh, where they were converted into garments and brought into India duty-free.

"This move would also reduce the backdoor entry of Chinese fabrics into India (without duty) that were getting converted in Bangladesh and being sent to India duty free," said Jain.

Short-Term Supply Issues Expected

While the policy shift benefits Indian manufacturers, some immediate challenges could arise for both domestic and global apparel brands operating in India. These brands, according to industry estimates, source anywhere between 20 per cent and 60 per cent of their garments from Bangladesh.

"Buyers will be impacted as temporarily their supply chain will be disrupted and would have higher cost and lead time," said Jain.

The impact could be more pronounced in the upcoming winter season, as delays in shipments may lead to supply shortages. As a result, prices of popular categories such as T-shirts and denim garments could see a temporary increase of 2-3 per cent.

Bimal Bengani, chairman (eastern region) of the Federation of Indian Export Organisations (FIEO), noted that the brunt of the change is likely to be felt more by Bangladesh than India. “India is not going to lose much... It will be difficult for Bangladesh to import by sea route through containers over the land route, which took a couple of days," he said.

At present, imports make up just 1-2 per cent of India’s total apparel consumption. However, Bangladesh remains a significant player, contributing around 35 per cent of these imports. With land routes blocked and sea shipping less efficient and more expensive, the new policy could mark a turning point in India's bid to strengthen its textile manufacturing base and curb duty-free inflows from its eastern neighbour.