Bangladesh's exports to India increased by 65% to $700 million year-on-year in the first four months of the current 2021-22 fiscal year.
With this, the neighbouring country has entered the list of the top six export destinations of Bangladesh.
If the growth continues at the current pace, the country's export income from the largest economy in the South Asia region will exceed $2 billion for the first time this year, according to exporters as well as officials of the Export Promotion Bureau (EPB).
In FY21, the country's exports to India crossed the $1 billion mark for the first time and stood at $1.28 billion.
Meanwhile, Bangladesh's exports to its largest market, the United States of America (USA) – a destination for one-fifth of the country's total exports – grew by more than 35% in July-October this year. Exports growth to other major destinations in Europe, including Germany and the United Kingdom (UK), also saw marked growth during the period.
Riding on this strong growth trajectory, the export receipts surpassed the $3.46 billion target set for the month of October by 36.5% while the year-on-year growth in the month was a whopping 60.37%.
The Ministry of Commerce has set an export target of $43.5 billion for the current financial year. Exports in the four months to October stood at $15.7 billion, which is 13.33% more than the four-month target.
Exporters are expecting high growth in the export of goods to these countries in the coming days as the economies there are turning around overcoming the shocks induced by the Covid-19 pandemic.
EPB Vice Chairman AHM Ahsan told The Business Standard that exports of major products to major markets have increased in recent months, thanks to an improvement in Covid situation across the world coupled with various government initiatives to diversify export products and markets.
"Hopefully, this trend will continue in the future," he said.
Abul Matlub Ahmad, president of the Bangladesh-India Chamber of Commerce and Industries, told TBS that Bangladesh's exports to India would touch the $2 billion milestone in the current financial year if the current trend of growth continues.
Mentioning that India is one of the largest importers in the world, he said Bangladeshi exporters are benefiting from the export of various new products including ready-made garments and food products to the country. Exports of jute and leather and leather products are also increasing this year, he continued.
Matlub Ahmad also said Bangladeshi exporters are focusing on India outside the conventional markets, including the United States and the European Union, to take advantage of India's duty-free access facility to all but 25 products.
Lower shipping charges is another major reason for the increase in exports to India, he said.
"Shipping charges have tripled internationally due to the pandemic. As Bangladesh has a land border with India, Indian importers are being encouraged to import from Bangladesh to reduce this extra cost. Due to this, exports to India are growing at higher rates than to other countries," he added.
The former president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) further said that the main reason for Bangladesh's high export growth to European countries and the United States is the ongoing US-China trade war.
"The breaking down of international shipping and logistics chains is also hurting China's exports to Western countries, which is benefiting Bangladesh. This will continue in the future," he said.
Major products have been the key to rising exports to India
According to the EPB, the 64.7% growth in the country's exports to India – with which Bangladesh has an annual trade deficit to the tune of $5 billion – during the July-October period was the highest when compared to growths in export income from other markets in the list of top 20 export destinations.
Bangladesh's exports to India against its total exports were 3.31% during the July-October period of last fiscal year. The figure has increased to 4.44% during the corresponding period this year.
The EPB has not yet prepared product-wise export data for October. However, an analysis of the export data to India for three months till September shows that the high export growth there was mainly driven by an increase in exports of the major export products – such as woven and knitwear, jute and jute products, cotton and cotton products, plastics, and leather and leather products.
Especially, the approval to export wet blue (wet leather tanned with chrome salts) during Eid-ul-Azha and a crisis of jute in both the countries caused significant growths in exports of these two items during the period, according to people concerned.
Growing US market
Bangladesh earned about $800 more in export receipts from the US in July-October this year when compared to the same period a year ago. As a result, Bangladesh's exports to its largest export market exceeded $3 billion in just four months.
Bangladesh earned less than 18% of its export income from the US during the first four months of last fiscal, but the figure stood at 19.5% during the corresponding period this year.
Bangladesh's exports to the US had taken a heat from the Covid-19 pandemic. Despite a drop in exports in the previous fiscal year, the growth rate in exports to the United States in the last fiscal year was less than 6%. However, since the US economy turned around after the epidemic, exports of caps, home textiles, and crustaceans have been growing at a high rate alongside woven and knitwear.
Consolidating grip on Europe
After the US, Germany, the UK, Spain, and France were the top four export markets for Bangladesh during July-October this year. Exports to all of these four countries saw double-digit growths in the four months and the highest 13.28% growth was to Germany.
Among the European countries in the top 20 export markets, the lowest growth was in Italy, at 5.43%.
Among European countries, Poland, the Netherlands and Spain have seen the highest growth in imports from Bangladesh in the current financial year. Bangladesh's exports to Poland increased by 31% year-on-year in July-October this year while those to the Netherlands and Spain were 27% and 22.53%, respectively.
Benefit of duty-free access to Chinese market
Dhaka has also started reaping the benefits of duty-free export of 97% of its products to China, the largest economy in Asia. Bangladesh's exports to the country grew by 11.94% year-on-year in July-October this year.
During the period, exports to Japan also grew by more than 13%.
Among Asian countries, Bangladesh's exports to the United Arab Emirates almost doubled to $210 million.
Exports to Russia rose by a quarter to $207 million.
New markets show promise
An analysis of EPB data shows growth has been achieved in 19 of the 20 major markets of Bangladesh during July-October. During the period, exports growth was negative only to Turkey where Bangladesh's exports fell by almost 50% to $103 million.
EPB officials said the export growth was higher in non-conventional markets than in the conventional ones. Exports to non-conventional markets outside the top 20 export markets increased by 39.42%.
Exports to the new market stood at $1.38 billion in July-October last year, which have increased to $1.93 billion this year.
What exporters want
Md Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "Our exports have witnessed a strong growth as many work orders are shifting to us from our competitor countries because of export disruptions in Vietnam and India, owing to Covid-19 and political instability in Myanmar and increased production cost in China."
"We still have enough orders coming in," he said, adding, "But, in order to utilise it, it is necessary to increase the single-borrower exposure limit to 20% in the case of providing bank loans to readymade garment exporters."
He also emphasised the need for developing port infrastructure.
"Imports have gone up due to increase in prices of various raw materials including woven fabrics. It is not possible to import raw materials as per the export orders as the exposure limit has not been increased," he added.
Bangladesh’s export income from India is expected to cross the $2 billion mark for the first time this year
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