Indian textile stocks surge as Bangladesh grapples with political turmoil

Textile stocks on Tuesday surged with some company’s shares trading higher by over 10%. The reason for the jump can be credited to the recent political upheaval in Bangladesh.

Bangladesh is a leading exporter of garments and the recent developments have caused a major disruption in the garment industry of the country.

On Monday, Prime Minister Sheikh Hasina stepped down from her position and fled the country. Following this, the Bangladeshi army announced an interim government would be set up to maintain order.

Amidst the political chaos, the garment manufacturing body of Bangladesh called for a complete halt to the operations of all garment facilities in the country.

The garment industry contributes significantly to the country’s exports. Major retail brands like H&M and Zara import ready-made garments from Bangladesh on a large scale. According to the World Trade Organisation’s ‘World Trade Statistics 2023’, Bangladesh exported $38 billion worth of garments in 2023. China and the EU are the top two exporters of garments while Bangladesh is the third-largest in the world.

With Bangladesh’s garment industry dealing with uncertainty about when production will resume, investors turned their eyes to Indian textile stocks.

Indian textile companies could possibly capitalise on the uncertainty of when normalcy would return to Bangladesh.

India has also proven to be an attractive source for international buyers and may see more business due to the political situation in Bangladesh. Additionally, favourable government policies and high domestic demand provide more impetus for the Indian textile industry to grow.