Imports from India Surge as Exporters Struggle with Lead Time Constraints

Bangladesh’s dependence on Indian imports has been steadily increasing as local manufacturers and industries grapple with reducing procurement time from alternative sources. The challenge of meeting stringent lead times set by international buyers has led to a shift towards sourcing from India, a geographically closer and logistically efficient trade partner.

Rising Imports from India: A Statistical Overview

The Bangladesh Bank’s data highlights the rising trend of imports from India, particularly of raw materials such as cotton, yarn, and fabrics. The reliance on India has intensified since July 2023, when political unrest and labour strikes severely disrupted supply chains and production.

Why Indian Imports? The Advantage of Reduced Lead Time

Lead time remains a critical determinant of competitiveness in global trade, especially in the post-pandemic landscape shaped by high inflation, the Russia-Ukraine war, and changing consumer demand patterns. International retailers and brands have shortened order fulfilment times from 90 days to 45 days, creating immense pressure on Bangladeshi manufacturers.

If local garment exporters source cotton from Africa, Latin America, Australia, or the United States, the shipment takes approximately:

• 35 days to arrive at Chattogram port
• 15 additional days to reach textile mills
• Total lead time: 45-50 days

Conversely, sourcing from India dramatically reduces lead times:

• 2-3 days for Indian cotton and yarn to reach mills
• Lower costs due to reduced transportation expenses

This logistical advantage has led to a resurgence in imports of Indian raw materials, particularly cotton. Bangladesh imports over $3 billion worth of cotton annually, with over 50% sourced from India. The import value of Indian cotton surged from $1.92 billion in FY23 to $2.36 billion in FY24.

Key Commodities Imported from India

Additionally, trade through formal channels has witnessed a notable rise, as border security measures have curtailed informal trading routes. With 24 operational land ports, three rail ports, and increased surveillance, illicit trade has significantly diminished.

Challenges in Bilateral Trade

Despite Bangladesh’s high dependence on Indian imports, its export performance to India remains relatively weak. While Bangladesh enjoys duty-free trade privileges, exports remain constrained by a lack of product diversification.

According to the Export Promotion Bureau (EPB) of Bangladesh, most exports to India consist of ready-made garments, with limited diversification in other sectors.

Expert Opinions on the Growing Dependence on India

Showkat Aziz Russell, President of the Bangladesh Textile Mills Association (BTMA), noted that global business trends have left Bangladesh with no alternative but to rely on Indian goods, given the urgent need for shorter lead times.

Md Abdul Wahed, Joint Secretary General of the India-Bangladesh Chamber of Commerce and Industry, pointed out that enhanced border security and improved trade logistics have reduced informal trading, further reinforcing reliance on formal trade routes.

Monsoor Ahmed, a former CEO of the BTMA, highlighted another crucial factor: the US dollar shortage in Bangladeshi banks, which has made it difficult to open Letters of Credit (LCs) for suppliers in other countries, thus pushing importers towards India.

Geopolitical & Economic Implications

Dr Mohammad Abdur Razzaque, Chairman of the Research and Policy Integration for Development (RAPID), emphasised that the Indian economy complements Bangladesh’s industries, with India being the second-largest source of industrial raw materials globally after China. He also noted that geographical proximity, cultural similarities, and linguistic familiarity further contribute to increased trade reliance.