Bangladesh’s textile sector is facing mounting pressure as a surge of inexpensive Indian yarn continues to flood the domestic market, challenging local spinning mills and destabilising the industry’s value chain. Contrary to expectations that global tariffs on Indian textiles would benefit Bangladesh, the outcome has been quite the opposite. Local manufacturers now find themselves struggling to match the lower prices offered by imported yarn.
The Bangladesh Textile Mills Association (BTMA) reports that producing one kilogram of yarn locally costs around $3, while similar-quality Indian yarn is arriving via sea routes for approximately $2.60 per kg. This widening price gap has given Indian suppliers a clear advantage and has intensified competition in recent years. Yarn imports from India rose by nearly 41% in 2024, while sales of locally produced yarn declined sharply by around 30%. Industry officials say this trend has created a tough environment for domestic producers, with one leader noting that the current price gap makes it “extremely difficult for Bangladeshi spinners to compete.”
Concerns have also emerged about duty-free yarn imported under bonded facilities being diverted into the local market. Industry players say such practices distort pricing systems, disrupt supply chains, and harm compliant mills already under severe pressure.
The challenges are not limited to external factors. Domestic policy changes have further strained the spinning sector. Export cash incentives for using homegrown yarn have been reduced from 3–4% to just 1%, diminishing the financial appeal of sourcing locally. Meanwhile, rising utilities, interest rates, and logistics costs continue to push up production expenses, particularly affecting smaller mills. Many have scaled back operations or suspended production entirely, and BTMA officials estimate that more than 50 factories have partially or fully closed over the past few years.
Although several listed textile companies reported improved full-year performance in FY25 compared with FY24, quarter-on-quarter earnings remain under pressure. The April–June period, in particular, saw declines in profitability for many firms.
The consequences of the ongoing crisis extend beyond spinning mills and may impact the broader ready-made garment (RMG) sector, which relies heavily on strong backward linkages. A weakened domestic yarn supply risks increasing reliance on imports, reducing value addition, and exposing Bangladesh’s apparel industry to global price volatility. Stakeholders warn that sustained pressure could trigger widespread mill closures, job losses, loan defaults, and a reduction in export capacity — developments that could threaten one of the country’s most vital industries.
Industry experts argue that stabilising the sector now requires coordinated and strategic policy action. They emphasise the need to restore competitiveness through supportive measures, improved oversight, and stronger alignment between government agencies and industry bodies. Despite the mounting challenges, Bangladesh’s textile industry still retains the strengths that have made it a global apparel hub, and with timely intervention, the sector has the potential to regain stability and return to sustainable growth.
