A strong believer in trade alliances with its neighbouring countries, Bangladesh offers a range of opportunities for Indian SMEs from various sectors.

A few decades back, Bangladesh was under military rule with virtually no private sector to speak of. Despite registering a growth of 57% in the Seventies immediately after Independence, and 29% in the eighties, Bangladesh, under the military rule, offered little business opportunities to Indian exporters .

But things changed gradually after democracy was restored in the country in 1990; the first few years witnessed a dramatic change in the economic structure and profile of Bangladesh. From the state-led, socialist ideology of the past, the country moved towards the creation of a more liberal, market economy. And, after decades of economic problems, Bangladesh has started to rebound with steady growth only in recent years.

Textile sector in Bangladesh

At present, sectors such as textile, seafood, ceramics, pharmaceuticals and software development are growing and contributing positively to Bangladesh's economy.  Among these sectors, textiles is the largest export sector of the country, and it is the fastest growing industry with ready made garments accounting for more than 78% of total export earnings.

Bangladesh is today one of the top five ready made garments (RMG) exporters in the world with annual exports of RMG over US$8.10 billion. The projected target by 2010 of RMG exports is US$10.00 billions. Despite strong global competition, Bangladesh still has the ability to compete with any country in the RMG sector.  Great potential and market opportunities have led to continuous growth in the textile sector over the years.

In the fiscal year 2006-2007 ending in June Bangladesh imported ready made garment related products worth at least US$ 4 billion. Textile, machinery and raw materials accounted for nearly 40% of the total import cost of the country. Importers brought in US$1.54 billion worth of capital machinery of which the textiles sector accounted for US$484 million and the garment sector US$346 million.

Opportunities for Indian exporters

In the above scenario, Indian exporters in the relevant field should seek opportunities in the following fields-

• Export of recondition/latest machinery and equipment
• Export of accessories, process control equipment, projects and services
• Joint ventures/project collaboration
• Technology transfer.

Industries Indian exporters should target

From the viewpoint of processing, textile mills in Bangladesh could be classified as the following-

• Dyeing - Finishing mills of woven fabrics
• Knitting mills
• Knit - dyeing - finishing mills
• Spinning mills- Yarn production from raw cotton.
• Knit composite mills (a range of different processes are carried on)
• Weaving mills- Weaving of fabrics (grey fabrics)
• Woven composite mills (a range of different processes are carried on)
• Hosiery units
• Manufacturing of readymade garments.

In addition, there are different types of textile mills engaged in the processing of yarn and fabrics such as yarn dyeing, terry towelling, woollen fabric manufacturing, processing and production of silk yarn and fabrics.

Indian manufacturers and exporters of textile machinery and components should seek opportunities to supply requirements for the aforesaid textile sectors in Bangladesh. To encourage export, the import duty on textile machinery, most of the spares and accessories, dyes and chemicals and raw cotton have been reduced to zero by the Bangladesh government. Import duty at 7.5% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery.

Documentation required for commercial shipments to Bangladesh include a commercial invoice, bill of lading or air waybill, an insurance certificate that must be underwritten by the Sadaran Bima Corporation or any Bangladesh insurance company, and pro forma invoice. A certificate of origin may also be requested.

Useful websites

• Ministry of Foreign Affairs- www.mofabd.org
• Ministry of Home Affairs- www.bangladeshgov.bd
• National Board of Revenue, Bangladesh- www.nbr-bd.org
• Board of Investment- www.boibd.org
• Dhaka Chamber of Commerce and Industry- www.dhakachamber.com
• International Chamber of Commerce, Bangladesh- www.iccwbo.org
• Metropolitan Chamber of Commerce, Bangladesh- www.mccibd.org