The textile industry of Bangladesh has failed to remain competitive on the global stage due to an energy crisis, higher financing costs, land scarcity and a shortage of skilled manpower, according to industry insiders.
In addition, unfair pricing of imported yarn and fabrics, alongside illegal inflows of these materials, continues to undermine the capabilities of domestic millers.
As a result, instead of strengthening their competitive edge, millers are now struggling to supply raw materials even to local buyers.
Data from the Bangladesh Textile Mills Association (BTMA) shows that the domestic textile and apparel market is worth around Tk14,000 crore, with annual fabric demand standing at 8 billion metres.
Mohammad Ali Khokon, former president of BTMA, said the cost of producing yarn has increased by Tk49 per kg due to gas and power shortages, indicating a threefold rise in input prices alongside higher wages.
“Nearly 35 percent of the sector’s production capacity remains unused. At least 50 major mills have shut down in recent months, forcing many workers to switch professions or face unemployment,” he told TIMES of Bangladesh.
Industry insiders further said that while competing countries are offering extensive subsidies to strengthen their textile and garment sectors, Bangladesh is gradually reducing them.
In the EU market, cash support for locally produced fabrics has been cut from 2 percent to just 0.5 percent. Incentives for new markets and new products have also been reduced, along with additional benefits previously offered to small and medium-sized enterprises (SMEs) in the apparel sector.
Rajib Hayder, managing director of Outpatch Spinning, said cash incentives across different categories had long served as a lifeline for entrepreneurs struggling with rising production costs.
“The sector is already grappling with a prolonged gas crisis, while gas prices have surged by 250 percent and workers’ wages have increased by 70 percent,” he said.
Moreover, bank interest rates have climbed, adding further pressure.
“As a result, Bangladesh’s textile industry is increasingly losing ground to its competitors, with most factories now operating under significant financial liabilities,” Hayder added.
Textile millers also warned that the industry will face deeper trouble unless production costs are reduced, illegal imports are curbed, and investment in man-made fibre (MMF) production is accelerated.
With local materials becoming less competitive, apparel exporters are increasingly turning to cheaper imported alternatives, they said.
Although local mills have the capacity to supply both export and domestic markets, illegal imports and under-invoicing are eroding their market share.
Of the BTMA’s 519 member factories, 200 supply exclusively to the local market.
Khorshed Alam, managing director of Little Group, said large quantities of yarn and fabrics are entering the country through false declarations, with smuggled products flooding the market.
“These tax-evaded items are sold at prices around 20 percent lower than local products. Some apparel factories are also accused of diverting duty-free raw materials imported for export purposes into the local market,” Alam said.
“These factors are preventing local textiles from flourishing,” he added.
A study by PricewaterhouseCoopers (PwC) projects that global apparel exports will reach $1,121 billion by 2030.
Countries such as China, Vietnam and Turkey already rely heavily on MMF-based products, while Bangladesh remains dependent on imports for 90 percent of its MMF needs.
Only 27 percent of Bangladesh’s garment exports currently fall under this category, with the country importing nearly 400,000 tonnes of MMF annually.
Industry stakeholders believe domestic production of recycled and virgin polyester fibre could significantly reduce reliance on imports.
There is also potential to develop viscose fibre using jute, although no investment has materialised in this area yet.
Shams Mahmud, managing director of Shasha Denims, said that if the textile sector fails to strengthen its capacity, Bangladesh’s garment industry will face serious risks after graduating from the category of least developed countries.
“This is because, under the EU’s GSP+ requirements, Bangladesh will need to increase its share of locally sourced raw materials in exported products,” he added.
Cotton dependency is another constraint on the textile industry’s ability to flourish.
Bangladesh imports around 80 lakh bales of cotton each year at a cost of about $3 billion, as domestic production meets only 2.5 percent of total demand.
