[🇧🇩] Textile & RMG Industry of Bangladesh

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[🇧🇩] Textile & RMG Industry of Bangladesh
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Apparel exporters go into overdrive to meet deadlines

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Many factories are now operating around the clock to make up for the time lost in July, August and September.

Garment exporters have gone into manufacturing overdrive to recover from continual production disruptions over the past three months due to nationwide protests and curfews, the fallout from the ouster of the previous government, and the recent spell of labour unrest at major industrial belts.

Factories are now operating around the clock to make up for the time lost in July, August and September -- the peak months for shipping Western orders centring Christmas and securing bookings for the upcoming autumn and winter seasons.

Besides, local exporters are turning to subcontractors and requesting extensions from international retailers to maintain long-standing business relationships.

According to Indian rating agency CareEdge Ratings, if the crisis continues for more than a quarter or two, nearly 10 percent of Bangladesh's ready-made garment (RMG) export orders could shift to market rivals like India and Vietnam.

At present, many exporters fear they will have to provide big discounts or opt for expensive air shipments due to production delays while some may face order cancellations.

According to apparel makers, shipping one kilogramme (kg) of dry cargo from Dhaka to Europe by air can cost over $4 while the same can be transported by sea for less than 10 cents.

Exporters said if international retailers and brands allow extensions to lead times considering the labour unrest and political changeover, they may be able to avoid adverse impacts.

"I have already requested extensions from the retailers and brands that I work with, explaining the recent labour unrest and political changes in the country," said AK Azad, chairman and managing director of Ha-Meem Group.

"I am hopeful that they will approve extensions if the current state of normalcy continues in the factories," he added.

Moreover, Azad is seeking subcontractors to ensure the timely production and shipment of goods.

Following the ouster of the Sheikh Hasina-led Awami League government on August 5 by a mass uprising, labour agitation in major garment industrial hubs flared up.

Their 18-point charter of demands included increased attendance bonuses and tiffin allowances.

After lengthy consultations with union leaders and the authorities during tripartite meetings, factory owners agreed to all 18 demands made by the workers and issued a joint statement on September 24.

Azad said all of Ha-Meem Group's factories are now operating at full capacity as normalcy is returning to industrial belts.

A major European retailer in Dhaka said his company did not cancel or seek discounts from any local suppliers due to the student movement, curfew, internet blackouts, political changeover or labour unrest, as they understood the turbulent political atmosphere.

"We are happy that normalcy is being restored to the sector," he said. "The shipment of our goods is now back on track."

Shams Mahmud, managing director of Shasha Denims, whose buyers include multinational giants like H&M and Marks & Spencer, said the labour situation has now stabilised and almost all factories are back in production.

"We are part of a global supply chain. Most of the orders we take are time-sensitive. Hopefully, with the improving law and order situation, we will be able to deliver goods on time," Mahmud added.

However, he said the backlog would likely lead to air shipments and discounts.

He noted that the financial implications of the situation require attention from the government and the central bank.

"Almost all RMG factories are currently burdened by forced loans due to mismatches in imports, exports, salaries, bank loan repayments and overdue payments," Mahmud said.

"Unless these issues are addressed promptly, especially for small and medium-sized garments, there could be long-term negative effects on macroeconomic stability."

He added that brands remain committed to Bangladesh.

"In all these discussions, the importance of Bangladesh's position, along with necessary investments in renewable energy and carbon reduction as well as the deployment of a circular ecosystem, is getting lost," he added.

Khandoker Rafiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association, said on Wednesday that since normalcy is being restored to the garment sector, they would meet with major retailers and brands on Sunday or Monday to discuss the overall situation.

Buyers are expecting quick delivery, but they have not cancelled work orders yet, he said.

Islam also said that the garment sector lost over $100 million due to the recent labour unrest, as many factories were unable to produce goods and ship them on time. Buyers' visits to factories were also cancelled.​
 

Inside the lives of rmg workers

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Photo: Aklakur Rahman Akash

In the shadowy predawn hours, the air in Ashulia, a small industrial town on the outskirts of Dhaka, is thick with anticipation.

The rhythmic hum of sewing machines will soon fill the air, heralding another day for the world's second-largest garment-exporting nation.

But before the machines roar to life, a different kind of movement begins – the quiet exodus of thousands of garment workers from their homes to the factories that dominate the landscape.

As the first rays of light break through the smog-heavy night, Rubiya Akter, a 30-year-old garment worker, emerges from a tin-roofed shack.

Her calloused feet hit the dusty path, each rhythmic step a testament to years behind a sewing machine.

Rubiya's day begins long before the sun dares to peek over the horizon, a brutal schedule dictated by the relentless demands of the fashion industry.

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"I leave my children alone all day due to the immense pressure of work," she said.

Rubiya's long work hours and meagre wages exemplify the plight of lakhs in Bangladesh, where the demands of global fashion brands clash with the realities of the labour force.

Behind Rubiya, in the tiny tin shed she calls home, lie her most precious treasures: her daughter Omi, 6, and son Rakib, a Secondary School Certificate (SSC) candidate.

The single room that houses their dreams is a masterclass in resourcefulness. A single bed, where her children sleep soundly, hogs most of the space. Clothes hanging on the walls serve as a colourful tapestry of their life, each garment a story of careful budgeting and maternal pride.

In one corner stands an old refrigerator, a prized possession acquired through months of saving. But more often than not, its dim hum is all the comfort it offers. The shelves inside lay bare, a stark reminder of the family's financial standing.

Housing conditions are cramped and facilities are stretched thin.

"We have only two bathrooms for 10 families. We have to stand in line every morning," Rubiya said.

Education, seen as a path to a better future for future generations, comes with its own set of obstacles. "The kids walk to school, which takes an hour. All the schools are one hour away from our house."

Healthcare accessibility also proves challenging. The nearest affordable medical facility, Gonoshasthaya Kendra, is a gruelling journey away.

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"It takes almost 2 hours on the road, but we go there for medical treatment as it is less expensive."

The arithmetic of survival

As Rubiya walks, calculations race through her mind.

Her monthly salary of Tk 12,800 – hard-earned through countless hours of stitching and sewing – seems to evaporate before her eyes.

The numbers dance in her head: Tk 3,500 for rent, Tk 500 for electricity, Tk 6,000 for food and basic necessities.

The remaining Tk 2,800 must somehow be stretched to cover her children's education – Omi's school fees and Rakib's crucial SSC exam preparations.

"Sometimes I can't even pay tuition fees," she admitted, the weight of stress evident in her voice. "I need to borrow money frequently. It's a cycle that never ends."

In Ashulia's kitchen market, four eggs cost Tk 65, broiler chicken Tk 200 per kilogramme (kg), beef Tk 750 per kg, onions Tk 120 per kg, and green chilis Tk 70 per kg.

"I generally cook small tilapia fish for my children as I can't afford beef," Rubiya explained. "There was a time when I tried to purchase eggs every day, but due to price hikes, those are now out of reach."

Speaking about the standard of living of RMG workers, Syed Sultan Uddin Ahmmed, executive director at the Bangladesh Institute of Labour Studies (BILS), said real wages had not increased greatly because of persistent inflation.

According to the cost of living indexes of various government institutions, including the Bangladesh Bank, it is not possible to live on Tk 12,500, the minimum monthly RMG wage.

"Our government has not adopted any programmes for workers' welfare for a long time. There is no initiative to improve industrial areas with schools, hospitals, markets, housing, or transportation. The civic benefits and social security of workers should be ensured regionally. Again, at the factory level, workers do not have the opportunity to express themselves, so their needs are not known."

Stories of struggle

Rubiya's story is not unique. Similar tales of hardship echo throughout the narrow alleys and crowded worker houses in Ashulia, home to over 407 garment factories.

Shahida Khan, 37, works as an operator from 8 in the morning to 10 at night. A single mother, she supports her university-going daughter on a monthly salary of Tk 12,500.

Including overtime, she earns a maximum of Tk 16,000.

"My daughter lives in Dhaka," Shahida shared. "Her semester fee is Tk 3,000. Plus, there's her sublet rent. I can't save any money for her future. Meat is a dream for us."

Nearby, Polash Mahmud and Jasmin Akter struggle to balance work and family. Their 4-year-old son lives with relatives in their village home of Jamalpur, a heart-wrenching decision driven by necessity.

Polash mentioned: "I used to be the sole earner, but now my wife also works at the factory to help make ends meet."

Due to their struggles, they have had to sacrifice their role in raising their child.

"We've sent our son to the village as we don't have enough time or money to take care of him," Polash explained. "We have to send Tk 2,000 home each month. Mostly, I have to buy basic commodities on credit. There's no money left for medical and other necessary expenses."

Polash and his wife rent a small room for Tk 4,000. "The environment here is poor. When it rains, our house floods due to water logging, but we stay here to save on transport costs."

Hosna Akter is a 24-year-old mother of one child who has been working in a garment factory of Mirpur for more than five years. She was getting Tk 13,550 as a senior operator.

After working for five years, Hosna's husband Manna, an operator, earns Tk 13,800.

The couple's monthly expenditure includes Tk 6,000 for rent, Tk 400 for electricity, Tk 500 for internet, and Tk 8,000 for groceries – more than 54 percent of their joint earnings. Then there is the money that they have to spend on their child.

Hosna and Manna recently resigned out of frustration, deciding they would be better off if they relocated to their village.

Another worker from Mirpur, Shanta, has processed her way to Jordan to work as a labourer as she found it impossible to meet her expenses with the low pay in the garment sector.

A system under pressure

Data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) shows that there are 3.3 million workers in garment factories, with 52.28 percent being women.

Although the industry provides crucial employment, it also operates on razor-thin margins. Factory owners, under pressure from global brands to keep costs low, often struggle to improve working conditions or raise wages significantly.

Dr Rubana Huq, a former president of the BGMEA, said: "Tk 12,500 is not the ideal salary but because of not getting the prices from buyers and the declining value and volumes of the clothes, there is little scope to give anything more. Thus, we need to think about non-wage benefits such as transport, housing, and food subsidies. These are the areas that the government must consider. Manufacturers need to come forward too."

She added that workers must be given education and healthcare benefits.

Last year, workers protested for an increase in their monthly minimum wage to Tk 25,000. After negotiations, the government settled on Tk 12,500 for entry-level workers in the RMG sector – a 56 percent increase from the previous Tk 8,000, but still far below what workers say they need to live with dignity.

Of the amount, Tk 6,700 has been fixed as basic salary, Tk 3,350 as the house rent, Tk 750 as medical allowance, Tk 450 as conveyance, and Tk 1,250 as food allowance.

Bangladesh's garment exports reached $32.86 billion from July to February in fiscal year (FY) 2023-24, up 4.77 percent year-over-year, according to the Export Promotion Bureau (EPB).

The Export Promotion Bureau (EPB) noted that garment exports during the first two months of this year amounted to $9.47 billion, registering a 13.15 percent year-on-year growth.

Khondaker Golam Moazzem, a research director of the Centre for Policy Dialogue (CPD), opined: "The structure of the minimum wage is faulty. Allocations for basic housing and medical expenses are far less than required. Besides, some other expenses are important – child education, communication expenses, entertainment, and internet bills. These are not in the salary structure."

He added that workers did not compete on an even footing when it came to negotiating for better wages and working conditions.

"The wage negotiation should be tripartite, including the government, workers and owners. But in reality, the decision comes in a bipartite fashion – from the government and owners only," Moazzem said.

"Workers fear that they may lose their jobs during these negotiations. Meanwhile, owners argue that higher wages would increase costs and reduce competitiveness, though there's little evidence supporting this.

"According to the Bangladesh Labour Act, there are 12 indicators for wage negotiation, but only two or three are used. Ultimately, wage negotiations in our country are not data-driven and owners tend to avoid them."

The human cost of fast fashion

As the sun sets on another gruelling day, Rubiya makes her way home. Her fingers are sore, her back aches, but her resolve remains unbroken. Tomorrow, she'll do it all again.

The stories of Rubiya, Shahida, Polash, Jasmin, Hosna, Manna, Shanta and countless others serve as a powerful reminder of the human cost of the price tags we see in stores.

Some expressed plans to leave the industry if the situation of workers does not improve, agreeing that it's better to settle in their village homes.

As night falls, the factories finally fall silent. But in countless tiny homes, the struggle continues – a testament to the resilience of those who stitch our clothes and, in doing so, weave the very fabric of their dreams.​
 

50 RMG units suspend operations amid unrest
Staff Correspondent 28 September, 2024, 13:35

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The workers of a garment factory staged a demonstration on Dhaka-Mymensingh highway demanding resignation of an official of a garment factory in Konabari of Gazipur on Saturday. | UNB photo

At least 51 readymade garment factories in Ashulia and Gazipur suspended operations on Saturday, primarily after lunch, as workers staged protests over arrears, the reopening of factories, and demands for a wage increase.

Workers from several garment factories, including Mondol Knitwear, blocked the Bypile-Abdullahpur road in the Zirabo area of Ashulia in the morning, demanding the reopening of closed factories, the withdrawal of cases against workers, and an increase in the minimum wage to Tk 22,000.

Workers of four garment factories in Gazipur staged demonstrations over separate demands, including opening of closed factories and payment of arrears, New Age Gazipur corresponcent reported.

Workers also blocked the Dhaka-Mymensingh and Konabari-Kashimpur roads.

Workers of Jamuna Denims Limited in the Konabari area, HR One Fashion Limited and HR One Accessories factory in Shalna area and Silicon Swing Limited factory in Memberbari area held protests and blocked roads.

Law enforcement agencies later cleared the workers from both locations.

Officials from the Industrial Police stated that workers at Mondol Knitwear had blocked the Ashulia road for three hours in the morning due to their demands for a wage increase, among other issues.

As a result of these incidents, 20 to 25 readymade garment factories in Ashulia announced the closure of their units after lunch.

The majority of factories in the industrial zone had been operating since morning, with workers attending their workplaces.

Protests from the Lusaka Group and Mondal Group, along with several nearby factories, however, forced many to announce closures.

According to industry sources, a total of 49 garment factories in Ashulia and two in the Gazipur industrial belt halted production on that day.

Of these, 12 factories in Ashulia closed under labour law provision 13(1), which states ‘no work, no pay,’ while the remaining 37 factories announced a holiday as workers either did not report for work or left after attending.

Garment factory owners had agreed on September 24 to all 18 demands of the protesting workers, including increases in attendance, tiffin, and night shift allowances, in an effort to restore normalcy in the units, particularly in the Ashulia area, where protests had been ongoing since August 29.​
 

Major brands sticking to Bangladesh
Published :
Sep 28, 2024 22:02
Updated :
Sep 28, 2024 22:03

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Contrary to what has been claimed in a number of media reports, a recent survey of some 20 global apparel buyers points to their continued confidence in Bangladesh readymade apparel (RMG) industry. Following widespread protests by workers in the industrial belts of Gazipur and Ashulia since early this month, nearly 100 RMG factories were forced to shut down disrupting the export supply chain. These events have sent shockwaves across Bangladesh and beyond, but findings of a survey carried out by the Business and Human Rights Resource Centre (BHRRC) provide some reprieve. The centre had reached out for feedback from some twenty global clothing brands to know about their future plans on apparel sourcing from Bangladesh particularly in light of the recent labour-related disturbances. Interestingly, some of the major names have stated that they have no immediate plans to divert orders from the country, which include Adidas, C&A, H&M amongst others. Although some brands politely declined to share their future plans, one cannot forget that the country offers not only the economies of scale in production but offers some of the most competitive prices for particular segments in apparels anywhere in the world.

The relations between foreign brands and Bangladeshi garments manufacturers span many decades and it is not that easy to replicate these longstanding relations in a different country simply because of more favourable conditions elsewhere. Cost remains a major issue and sourcing particularly low-end products any of the other competing countries including India, Cambodia or Vietnam will inevitably bring new challenges for buyers. Hence it makes sense for a lot of these brands not to have transferred orders as they are waiting to see how the situation unfolds. Interestingly, the BHRRC found some major fashion brands to be unhelpful in coming up with information requested. As pointed out in a recent report published in The Financial Express, the body stated that "several brands were reluctant to provide information on the impact of the protests on how they have ensured responsible purchasing practices and protection of worker welfare during the unrest."

With the exception of two brands out of 11, all others were on board to offer varying degrees of vendor support and letters of credit options to help ease cash flow issues. What all this points to is that a sizeable portion of international brands are not abandoning the country's RMG sector. While one brand has been forthcoming in providing "low-interest or no-interest financing to suppliers and have also covered the cost of air shipments to mitigate delivery challenges", this is by no means the consensus amongst brands covered. Hence the question arises, what will be brands' response in the next quarter should unrest continue to persist in industrial areas.

It is obvious that the potential fallout of any further unrest will have on Bangladesh and it is heartening to learn that a tripartite agreement among government, the industry and labour rights organisations have been reached. That said, there are enough external elements that appear hell bent on continuing to brew discontent over perceived deprivations and it is very much up to authorities to improve the law and order situation. Buyers for their part should keep faith that the country is picking up the pieces after a total change in the seat of government and work with their Bangladeshi counterparts to overcome obstacles, and not abandon what is obviously a win-win situation out of panic. Things are improving on the ground and time needs to be given to restore order.​
 
It is clear beyond the shade of a doubt that the defeated party and their backer India, are behind this unrest ^^. No need to verbalize further. In any case, here is the Bangladesh apparel sector MMF strategy as defined and interpreted by Lightcastle Partners, a Dhaka thinktank. Bangladesh exports mostly cotton apparel currently and this will need to change.

The full article is available here,

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Bangladesh’s Fiscal Year (FY) 2024-25 budget has been prepared amidst ongoing economic challenges, proposing a total allocation of BDT 7,970 billion (around USD 66 million). Concurrently, the government has set an ambitious new export revenue projection of USD 110 billion by 2027, as outlined in the export policy for 2024-27. Achieving this ambitious target, requires urgent attention from the ready-made garments (RMG) industry leaders, as they strategize to boost apparel exports and maintain sector competitiveness in the global market.

However, Bangladesh’s RMG sector has faced a decline in export growth since the beginning of 2024, particularly from major buyer countries. One contributing factor to this decline has been the shifting trade policies in these markets. For instance, changes in U.S. trade policies and tariff structures have likely influenced export dynamics with Bangladesh. Simultaneously, the EU’s stringent green regulations and due diligence requirements have put additional pressure on Bangladesh’s export competitiveness. As a result, exports to the EU dropped by 9.85% (Eurostat, EU) between January and April, while exports to the USA fell by 14% (OTEXA, USA) during the same period, raising serious concerns for industry leaders.



As the RMG industry is increasingly saturated with cotton-based apparel production, manufacturers must diversify into non-cotton-based apparel, particularly man-made fiber (MMF) to retain Bangladesh’s position as the second-largest RMG exporter in the global market. The demand for MMF-based clothing is growing worldwide, driven by a focus on recyclable raw materials and high-value-added apparel, making diversification essential for Bangladesh’s export basket. Bangladesh must also align with upcoming EU regulations, such as the EU Green Deal framework and the Eco-design for Sustainable Products Regulation (ESPR). These regulations are prompting global apparel brands to shift towards sustainable initiatives, boosting the use of recycled inputs and encouraging suppliers to incorporate environmentally friendly materials.

Adopting such practices facilitates a closed loop within the apparel lifecycle, promoting circularity by ensuring resources are continuously reused or recycled into new garments.

This approach significantly reduces waste and diminishes reliance on virgin materials, helping Bangladesh meet its export targets and comply with international sustainability standards.

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Figure 3: Latest Annual Sustainability Report of Respective Brands.

Global brands are also increasingly integrating recycled raw materials into their production processes, as shown in the figure, and by adhering to these sustainable practices, apparel producers are incorporating environmentally friendly raw materials that require less water and energy. This shift includes focusing on man-made fibers (MMF) as part of sustainable raw materials for apparel producers. A key reason for MMF’s global ascent is its higher sustainability performance compared to cotton.

The Imperative to Integrate MMF in the Production Process​

Diversifying into various categories of fibers enables manufacturers to achieve a balanced production mix without overburdening a single material. With this diversification in mind, suppliers are increasingly incorporating man-made fibers (MMFs) into their production processes due to their superior recyclability.

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Figure 4: Defining various types of non-cotton fibers

Focusing on MMFs is crucial as it supports the implementation of a circular economy model, which extends the apparel life cycle, and carbon footprint by 1.5kg compared to using cotton across the value chain. MMF demonstrates lower water consumption and carbon emissions in comparison to cotton fibers. This increasing popularity of MMFs is helping exporters prepare for upcoming sustainability compliance regulations. Leading MMF-supplying countries like India and Vietnam are significantly ahead of Bangladesh in incorporating MMFs into their apparel production processes.


The recycling potential of man-made fibers (MMFs) offers a significant advantage for apparel manufacturers, enabling them to incorporate non-cotton raw materials into their production processes. This shift allows apparel leaders to capture a larger market share in the global apparel market. Consequently, in 2021, global exports of man-made and blended apparel reached USD 271 billion, surpassing cotton exports, which stood at USD 219 billion. Over the past decade, the relative significance of cotton garments has declined, while apparel made from man-made fibers has more than doubled.5

Global Landscape in the Production of MMF​

The growing global population also presents a significant challenge for the apparel industry. The United Nations estimates a population of 8.1 billion by 2025, leading to a substantial rise in food consumption. This, in turn, is expected to put a strain on arable land, potentially limiting the availability of natural fibers like cotton.

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Figure 6: Global Trend of Fiber Consumption

In response to this looming resource scarcity, the share of natural fibers in the apparel industry has declined from 41% to around 27% in 2020. This shift is driven by changing consumer preferences, as people worldwide become more conscious of the environmental impact of the fashion industry. Consumers increasingly prefer garments made from eco-friendly raw materials to reduce carbon footprints and minimize the use of virgin materials.


Producers are aligning their production processes with these consumer preferences, prompting suppliers to shift towards more non-cotton apparel, particularly MMFs. These fibers are favored for their durability, versatility, and ability to blend with other materials to create innovative fabrics. Over the past five years, non-cotton fiber production has grown at a compound annual growth rate (CAGR) of 2.5%, in contrast to a -1.4% CAGR decline in cotton production.


The global fashion industry is facing a pressing need for sustainable practices, and international brands are leading the charge in promoting a shift towards recycled man-made fibers (MMFs), particularly recycled polyester, among others. This strategic move capitalizes on the inherent recyclability of MMFs, offering a significant advantage over natural fibers like cotton and wool when it comes to post-consumer life. Recycled polyester, primarily derived from PET bottles, offers a compelling alternative to virgin polyester. Reusing PET bottles to create recycled polyester for garments embodies the circular economy principle within the fashion industry with approximately 99% of recycled polyester feedstock made from PET plastic bottles. Traditionally, garments made from virgin polyester rely on new petroleum resources. By diverting used PET bottles for clothing production, dependence on fossil fuels is reduced, and the overall carbon footprint is

lowered, implementing circular practices within the textiles value chain. But the innovation doesn’t stop there, international brands are actively exploring the potential of other post-consumer plastics like ocean waste and packaging scraps, alongside pre-consumer waste like fabric offcuts. This closed-loop system keeps plastic waste out of landfills and oceans, preventing pollution and environmental damage.

Recognizing the immense potential, leading brands like Adidas, H&M Group, and the Inditex Group have joined forces to significantly increase the use of recycled polyester in garments. Their ambitious target of 45% by 2025 is just the first step, with an ultimate goal of reaching 90% by 2030. Among the global brands, Nike took the initiative to make India’s national cricket team jerseys made from recycled polyester. Similarly, Adidas made the jerseys for the Indian team entirely from recycled polyester. By utilizing recycled polyester for these jerseys, India is harnessing the inherent environmental benefits of synthetic fibers like polyester.

(Cont'd in the next post)​

 

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