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Rediff.com  » Business » At $277 million, Bangladesh is India's biggest two-wheeler export market

At $277 million, Bangladesh is India's biggest two-wheeler export market

July 20, 2018 14:52 IST

Indian two-wheeler majors Hero MotoCorp and Bajaj Auto are the biggest beneficiaries of this surge and, between the two, they are estimated to control about half of the local market there

A booming economy driven by garment manufacturing in neighbouring Bangladesh is fuelling demand for two-wheelers, among other things.

India, the world’s biggest two-wheeler maker, has emerged the key gainer of this surge in demand.

 

The value of two-wheeler exports from India to Bangladesh jumped 50 per cent in FY18 to $277 million (Rs 1,900 crore), making it India's biggest export market, ahead of Sri Lanka.

The value of shipments to Bangladesh has more than doubled since FY16, when it was just $128 million.

Indian two-wheeler majors Hero MotoCorp and Bajaj Auto are the biggest beneficiaries of this surge and, between the two, they are estimated to control about half of the local market there.

The Indian duo is learnt to be fighting for a market leadership in the neighbouring nation. Bajaj Auto had been a market leader but that position is now threatened by Hero.

Bangladesh is estimated to have exported readymade garments worth $29 billion in the calendar year of 2017.

Hero MotoCorp

IMAGE: Indian two-wheeler majors Hero MotoCorp and Bajaj Auto are estimated to control about half of the local market in Bangladesh.Photograph: Amit Dave/Reuters

Riding on robust economic growth, the nation’s demand for motorcycles soared 50 per cent in 2017 to an estimated 360,000 units.

The high double-digit growth continues in 2018 as well.

Data available with the Union commerce ministry shows that Bangladesh was the only country in the top three export destinations to have seen a double-digit growth in two-wheeler exports.

The value of shipments to second biggest market Sri Lanka declined 3.5 per cent to $216 million.

Nepal, the third biggest market, saw a growth of just 3.7 per cent to $186 million.

India shipped two-wheelers worth $2 billion to 145 countries last year and Bangladesh alone accounted for 14 per cent of the exports.

To exploit the market effectively and remain competitive, Hero MotoCorp commissioned local manufacturing in Bangladesh.

HMCL Niloy Bangladesh Limited (HNBL) a joint venture company between Hero MotoCorp and Niloy Motors Limited, Bangladesh, set up a manufacturing unit at Jessore (Bangladesh). Hero holds 55 per cent equity in the unit that started commercial operations in June last year with a capacity of 150,000 units annually.

In FY18, HNBL reported unadjusted revenue of Rs 541 crore and a profit of Rs 77 crore, according to Hero’s annual report.

Bangladesh also happens to be India’s biggest market for truck exports, with shipments worth $232 million during FY18.

Bajaj Auto

IMAGE: Riding on robust economic growth, Bangladesh's demand for motorcycles soared 50 per cent in 2017. The high double-digit growth continues in 2018 as well.Photograph: Rupak De Chowdhury/Reuters

It also ranks among the top 20 markets for India in passenger vehicle exports.

A number of Indian companies have assembly units in Bangladesh.

Tata Motors has a joint venture assembly unit with Bangladesh’s Nitol Motors and sells commercial and passenger vehicles. Commercial vehicles major Ashok Leyland has an assembly unit in Bangladesh along with a local partner.

Sugato Sen, deputy director general at domestic automobile industry body Siam, said Bangladesh aspires to develop a local automobile manufacturing industry.

“They want to learn from India and partner with more and more Indian companies to step up local manufacturing,” he said.

Siam organised the first Indo-Bangla Automotive Show in February last year at Dhaka to strengthen the presence of Indian industry in Bangladesh.

The next edition of this show is scheduled to be held in February next year.

India's annual exports (all products combined) to Bangladesh stood at $8.46 billion in FY18. Of this, close to $600 million comes from exports of two-wheelers, trucks, passenger vehicles and buses.

Ajay Modi
Source: