Vinu: Manu, I came across this article in The Hindu BusinessLine dated June 6, 2025, about Kitex Garments betting big on the apparel industry shift from Bangladesh to India. Can you explain what's happening?

Manu: Absolutely, Vinu. Due to political unrest in Bangladesh, many global buyers are shifting their apparel sourcing to India. This shift is proving beneficial for Indian apparel manufacturers like Kitex Garments. Sabu Jacob, the MD of Kitex, mentioned that about 80% of Bangladesh’s exports go to the European market, mainly because of duty-free concessions.

Vinu: That’s interesting. So how is India preparing to capitalize on this shift?

Manu:  India is currently negotiating a Free Trade Agreement (FTA) with the UK, and is anticipating duty-free access to the EU. These steps will open up more opportunities for Indian exporters. Additionally, India already has trade agreements with the US that either eliminate or reduce duties. This makes Indian apparel more competitive and creates employment.

Vinu: I also read about some tariff changes in the US. Is that affecting this shift?

Manu: Yes, Jacob pointed out that during the Trump administration, a tariff pause encouraged the US to shift apparel sourcing from Bangladesh to countries like Cambodia, Vietnam, and now increasingly India, because these nations offer tariffs 15-20% lower.

Vinu: How is India performing in terms of apparel exports?

Manu: As of 2024, India’s apparel export capacity was $17 billion, and almost fully utilized at $16.5 billion. In contrast, Bangladesh’s export capacity stands at $56 billion, and China leads with $140 billion. This presents a huge growth opportunity for India.

Vinu: What’s Kitex Garments doing to stay ahead in this evolving space?

Manu: Kitex is aggressively expanding. They’re boosting production capacity to 3.1 million pieces a day, with a ₹3,500 crore investment in their Telangana plant. Their Warangal unit began production in April, and a Hyderabad facility is expected by December 2026.

Vinu: That’s a massive scale! How are their financials shaping up?

Manu: In FY25, Kitex achieved a record turnover of ₹1,020 crore, up from ₹641 crore—about a 59% increase. Even more impressive, profit after tax grew by 124% to ₹152.6 crore, up from ₹68 crore the previous year.

Vinu: Impressive growth indeed. Manu, can you explain a few technical terms I came across in the article?

1. Free Trade Agreement (FTA)
2. Tariff
3. Export capacity
4. Profit after tax

Manu: Sure!

1. Free Trade Agreement (FTA): It's a pact between two or more countries to reduce or eliminate trade barriers like tariffs and quotas. It makes it easier for countries to trade goods and services with each other.
2. Tariff: This is a tax imposed by a government on imported goods. Lower tariffs make imports cheaper for domestic buyers, while higher tariffs protect local industries.
3. Export capacity: This refers to the maximum potential value of goods a country or company can export in a given time. It indicates production capability and readiness to meet international demand.
4. Profit after tax (PAT): It’s the net profit a company earns after paying all its taxes. It shows the actual earnings available to shareholders or for reinvestment.

Vinu: Thanks, Manu! That really clears things up.

To learn more about Banking & Financial related topics
We invite you to join our Diamond Membership
Check - https://courses.carajaclasses.com/courses/Diamond-Membership-6305fad1e4b0cccc82d610be
For Special Discount on Diamond Membership 
Connect with us  - https://wa.me/919025100249?text=DLM