American fashion companies are increasingly diversifying their apparel sourcing and are exploring more opportunities in India amid growing risks and market uncertainties in Bangladesh, according to a recent US study.
The study highlights concerns about shipping delays, supply-chain disruptions, and political instability as top issues for US brands and retailers in 2024. India is seen as more competitive than other Asian suppliers due to its vertical integration, manufacturing flexibility, and lower geopolitical risks. As a result, more respondents now source from India (89%) than from Bangladesh (86%).
The study also shows that nearly 60% of respondents plan to expand apparel sourcing from India over the next two years, while only 48% are looking to expand sourcing from Bangladesh. High social-compliance risks and recent labor protests in Bangladesh are key concerns.
The report, conducted by the US Fashion Industry Association and the University of Delaware, indicates that Bangladesh’s high production costs, energy shortages, and lack of product diversification are reducing its competitiveness. In contrast, India’s advanced local textile manufacturing capability allows it to rely less on imported components. Bangladesh’s RMG exports to the US dropped significantly in 2023, and the country faces challenges from competitors like China, India, and Pakistan.
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