Bangladesh’s readymade garment (RMG) industry is entering a new phase of uncertainty, with the potential to trigger broader economic disruption.
The Bangladesh Textile Mills Association (BTMA) has announced an indefinite shutdown of all spinning mills starting February 1, citing a lack of effective government support for domestic yarn producers.
Industry stakeholders warn that if the shutdown proceeds, it could create an acute yarn shortage, disrupt garment production, and potentially stall the wider export sector.
The RMG industry remains a cornerstone of Bangladesh’s economy, but multiple pressures—yarn supply constraints, withdrawal of bonded facilities, rising production costs, and global market volatility—are converging.
If unresolved, these challenges could significantly impact exports, employment, and foreign currency inflows. Industry leaders are urging the government to adopt coordinated, timely, and forward-looking policy measures.
At a press conference on January 22 in Karwan Bazar, BTMA president Shawkat Aziz Russell described the textile sector as being in a “state of emergency.” He warned that without immediate government intervention, mill closures would be unavoidable from February.
He also criticized the burden of corporate tax, turnover tax, and VAT on spinning mills while bonded benefits on imported yarn remain in place, arguing that the policy undermines domestic production.
According to him, flawed decisions could harm investment, employment, and the banking sector, and should carry accountability.
Industry experts caution that failure to act promptly could jeopardize not only spinning mills but the entire RMG sector and the national economy.
BKMEA executive president Fazle Shamim Ehsan called the mills’ demands justified, stressing the need for immediate incentives to keep factories operational.
He urged coordinated discussions among BGMEA, BKMEA, and BTMA, while emphasizing that the government must take primary responsibility.
Former BGMEA director Mohiuddin Rubel warned that prolonged inaction could create economy-wide fallout beyond the industrial sector.
Bonded facility withdrawal and import controls
At a time when the RMG sector is already under pressure from global slowdown, declining orders, high interest rates, and energy shortages, industry groups have labeled the withdrawal of bonded warehouse facilities for 10–30 count yarn imports as a “self-destructive” decision.
BGMEA and BKMEA estimate that the move could put approximately $5 billion in exports at risk, threatening export earnings, foreign exchange reserves, employment, and macroeconomic stability.
BGMEA acting president Selim Rahman noted that the sector is already struggling under global market uncertainty, geopolitical tensions, and domestic energy constraints, and warned that removing bonded privileges at this moment could severely damage garment exports.
BKMEA president Mohammad Hatem added that imposing duties on yarn imports would negatively affect export competitiveness.
While supporting domestic spinning mills, he cautioned that removing bonded benefits could push the garment sector into deeper crisis, noting that exports have already been declining for six months.
Policy risks and government responsibility
BTMA president Shawkat Aziz Russell reiterated that domestic spinning mills face heavy tax burdens, while continued bonded benefits for imported yarn reduce the incentive to use locally produced yarn.
He described this as a contradiction in industrial policy and argued that misguided decisions could damage investment, employment, and financial stability.
Mohiuddin Rubel stressed that major policy decisions should follow coordinated impact assessments involving all stakeholders.
Without careful planning, rising costs could gradually push international buyers toward competing countries, creating long-term economic harm.
Market uncertainty rising
According to Export Promotion Bureau (EPB) data, Bangladesh’s total merchandise exports declined by 2.19% in the first half of FY26 (July–December).
In December alone, exports fell by 14.25%. The top five export sectors—RMG, leather and leather goods, agricultural processed products, home textiles, and jute goods—all recorded declines.
These five sectors account for nearly 89% of total exports, with RMG alone contributing 81%.
Mohiuddin Rubel reported that Bangladesh’s garment exports reached $38.82 billion in 2025, with growth of only 0.89%. A large share of exports consists of knitwear, which heavily relies on 10–30 count cotton yarn, making uninterrupted yarn imports critical for global competitiveness.
Experts also warn that potential trade tensions between the United States and the European Union, along with new international tariff pressures, could further strain Bangladesh’s export markets.
Protecting spinning without damaging garments
BGMEA and BKMEA leaders argue that restricting yarn imports is not an effective way to protect the spinning sector.
Approximately 85%–90% of domestically produced yarn is consumed by export-oriented garment factories, meaning spinning mills cannot remain sustainable if garment orders decline.
Instead of imposing import bans, the associations propose practical alternatives:
Industry leaders have expressed readiness for urgent dialogue with the government.
They caution that protecting spinning mills at the expense of the RMG sector would ultimately harm national economic interests, calling instead for coordinated, evidence-based, and forward-looking solutions.
Beyond domestic challenges, Bangladesh’s garment sector faces growing international pressures.
Reciprocal tariffs among the United States, China, and India, along with rising competition in Europe, are placing additional strain on export demand.
If these pressures persist, experts warn of impacts on unit prices, export earnings, and employment.
Data shows that in FY25, Bangladesh exported 2.85 billion kilograms of garments worth $39.32 billion, with an average export value of $13.78 per kilogram.
Analysts emphasize that sustaining competitiveness will require not only affordable raw materials, but also higher value addition, improved design, advanced technology, and stronger branding.
