Trump tariff on Bangladesh hands Surat textiles a giant opportunity

The Surat textile industry, which has made some gains in recent months due to the shifting of global bulk orders from Bangladesh, after a long period of distress, is looking at more improvement in the coming months.

The ongoing sociopolitical instability in Bangladesh has driven garment companies from the UK, the US, and Europe, previously reliant on Bangladesh for cotton and linen apparel, to alternative markets like India and Vietnam.

Traditionally known for producing synthetic yarns like rayon and low-cost readymade garments and saris, the Surat textile sector is now gearing up to meet demand for cotton fabric yarn and premium readymade garments made from linen.

Last week, US President Donald Trump announced 35 per cent tariffs on Bangladesh, effective August 1. This could further make Bangladesh exports less competitive, and buoy the Surat industry, it is expected.

Recognising this, on July 8, hours after Trump announced his tariff, Indian textile companies witnessed a surge in their stock prices. These include Welspun, Vardhman Textiles and Arvind, which have substantial operations in Gujarat.

Production boost

Bangladesh, among the world's largest garments exporter, accounts for 9 per cent of the US readymade garments market. If Trump's fresh tariffs do take off in August, the South Asian neighbour is bound to lose some more business to Surat.

Surat, similar to Tirupur in Tamil Nadu, has already seen a boost following last year’s political turmoil in Bangladesh, which resulted in the ouster of then Prime Minister Sheikh Hasina. Per the Federation of Textile Traders Association of Surat (FOSTTA), 120 new power looms have been ordered by various small and medium-sized textile mills in Surat since October 2024.

Also read | Why almost 5,000 Gujarat MSMEs have closed down in less than 5 years

Traditionally known for producing synthetic yarns like rayon, as well as low-cost readymade garments and saris, the Surat textile sector is now gearing up to meet demand for cotton fabric yarn and premium readymade garments made from linen.

Fresh investments

“This is a major boost for the industry, particularly for small and medium-scale traders," Champalal Bothra, president of FOSTTA, told The Federal.

"Several traders have invested in new power looms to begin weaving cotton fabric, even sending their workers to West Bengal for training, where cotton yarn production is well established. So far, 40 traders who previously focused on synthetic yarns have installed new looms and have already started producing cotton fabric at their mills,” he added.

“Earlier, only large textile companies like Reliance, Bombay Dyeing, and Welspun produced cotton yarns and exported them to Bangladesh, where the fabric was used to manufacture readymade garments. For the first time, small and medium traders are venturing into cotton fabric production,” he further said.

“Currently, orders worth Rs 430 crore, covering both readymade garments and fabric, are in production. We expect this to rise to Rs 500 crore by the end of October to meet demand for the Christmas and New Year season.”

Ray of hope after recession

Surat’s textile traders are optimistic that the influx of new orders will mark a turning point for the industry, which has been struggling with a prolonged recession since 2017.

“After nearly eight years of downturn, the situation finally seems to be improving, with rising demand from both domestic and international markets,” Kumar Manish, a third-generation readymade garments manufacturer in Surat, told The Federal.

Also read | Indian textile stocks recover amid Bangladesh’s supply chain crisis

“Earlier, we mainly used rayon and viscose because they were more affordable. But now, I’ve also sourced linen and cotton fabrics along with rayon and viscose. Production for the first batch of orders is already underway and will be dispatched by the end of September, ahead of Diwali in October. The international orders will be shipped by early November to meet Christmas demand,” he added.

"Traditionally, one-third of our annual production took place between August and September, driven by bulk orders for Diwali and Christmas. However, from 2017 to 2021, we didn’t receive those orders due to the impact of the GST rollout followed by the pandemic. We never fully recovered from those setbacks. Even in 2022 and 2023, business remained sluggish,” he lamented.

Treading with caution

However, some textile traders believe that the surge in global orders for cotton yarn from Surat may be temporary. They remain cautious about investing in cotton yarn production, which requires more costly power looms and infrastructure.

Some textile traders are still wary, fearing the surge in global orders for cotton yarn may be temporary. They remain cautious about investing in cotton yarn production, which requires costlier power looms and higher skill-sets.

“Many traders have taken up cotton yarn orders and purchased air-jet power looms to meet the demand. In Surat’s textile sector, which has traditionally focused on synthetic fabrics, we mostly use rapier looms. These are more versatile, handling a wider range of yarn types and fabric weights,” said Paravbhai Vadhasia, a textile trader from Surat.

“In contrast, air-jet looms are more expensive, require higher maintenance, and are less adaptable. They’re mainly suited for producing delicate fabrics like cotton, linen, or wool. Producing cotton on air-jet looms is also more time-consuming than working with synthetic fabrics. Moreover, our workers are not yet trained to operate these looms effectively,” he explained.

“I wouldn’t invest in producing a new type of fabric unless I’m sure the demand for cotton is here to stay and not just a temporary phenomenon,” he added.

Revisiting glorious past

Until 2017, Surat used to produce around 4 crore metres of fabric daily. Subsequently, production dropped to just 1.5 crore metres per day. Between 2017 and 2019, nearly 70,000 looms were sold as scrap after many small and medium traders were forced to declare bankruptcy.

“The industry once employed around 10 to 12 lakh workers, but now it can barely provide jobs to four lakh. Since 2017, the textile sector has faced one setback after another, beginning with demonetisation and the implementation of GST, followed by lockdowns during the pandemic, and then the Russia-Ukraine war,” said Bothra, who also serves as the Chairman of the Confederation of All India Traders (CAIT).
Also read | How civil unrest in Bangladesh has hit Gujarat's textile, chemical exports

Positive turn

“After the conflict in Bangladesh began, cotton yarn prices fell by Rs 8 per kg in August 2024. In addition to cotton yarn, Surat’s textile sector also exports polyester to Bangladesh. The shutdown of over 3,000 textile mills there created uncertainty for polyester traders as well.

This raised serious concerns among textile traders in Surat and Ahmedabad, many of whom relied heavily on trade with Bangladesh,” Bothra added.

“However, the situation took a positive turn when global brands that previously sourced cotton yarn and premium readymade garments from Bangladesh began approaching traders in Surat. The industry needed a lifeline and it finally got one,” he further said.