(Bloomberg) — Gokaldas Exports Ltd. has decided to put its plan to build a garments factory in Bangladesh on hold as the nation continues to face political turmoil that has killed hundreds of people during weeks-long violence.
The Indian company, which exports to more than 50 countries including the US, Canada and some European nations, will only engage in contract manufacturing in Bangladesh for now, according to Sivaramakrishnan Ganapathi, vice chairman and managing director of the Bengaluru-based firm.
“We have been watching the economy from a distance and we were not very sure of making that investment,” Ganapathi said in an interview on Bloomberg Television Monday. “We will wait and watch and see how it unfolds. We see a lot more opportunities for us out of India now.”
Bangladesh’s Prime Minister Sheikh Hasina was forced to step down and flee to neighboring India this month following a series of student-led clashes with pro-government supporters. What started as peaceful demonstrations seeking to abolish a government jobs quota turned into deadly unrest. More than 600 people have been killed during the weeks-long protests, the UN Human Rights Office said in a preliminary report.
Apparel manufacturing plays a big part in Bangladesh’s economy and will remain so for the foreseeable future, Ganapathi said. “So, it is in their interest, in the country’s interest to make sure that the apparel industry is well protected and supported.”
Some top European companies have approached Gokaldas Exports after the Bangladesh turmoil, seeking help in meeting their incremental demand, he said. Even though, buying from India instead of sourcing from Bangladesh duty-free would be expensive for them, it indicates that foreign brands are trying to derisk their businesses, Ganapathi said.
–With assistance from Anand Menon, Paul Allen, Avril Hong and Rakesh Sharma.
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