Bangladesh’s textile spinning and processing sector, long positioned as the backbone of the country’s export-oriented garment industry, is facing a deepening crisis, with millers urgently seeking government intervention to prevent widespread closures and job losses.
According to the Bangladesh Textile Mills Association (BTMA), nearly 58 spinning and dyeing mills have partially or fully shut down, leaving more than 100,000 workers unemployed. Industry leaders warn that without immediate policy support, closures could accelerate sharply over the next year.
Over the past three decades, more than $23 billion has been invested to build Bangladesh’s backward linkage capacity. This enabled the sector to achieve close to 100% self-sufficiency in cotton-based knit yarn and around 80% in woven yarn, significantly reducing import dependence for the ready-made garment industry.
However, BTMA says conditions have deteriorated rapidly over the last year, intensifying over the past three months due to falling demand, rising costs, and growing import pressure.
BTMA seeks incentives and safeguards for duties
In formal letters sent to multiple ministries this month, Showkat Aziz Russell, President, Bangladesh Textile Mills Association, urged urgent policy support to stabilise the sector. One proposal calls for a 10% special incentive on local yarn sales for five years, up from the current 1.5%.
The association has also proposed a mandatory requirement for exporters to source at least 50% of yarn locally, alongside the temporary imposition of safeguard duties on cotton yarn imports.
“These mills are shutting down because production costs have risen by nearly 20%, while policy support has steadily declined,” said Russell, adding that bank interest rates have jumped from 9% to 16%, while working capital access has tightened.
The proposals were discussed this week in a meeting with the commerce ministry. Saleudh Zaman Khan, Vice President, Bangladesh Textile Mills Association, said the industry presented three options—enhanced incentives, mandatory local sourcing, or safeguard duties—while acknowledging that trade remedies would require legal processes.
Imports, dumping, and falling demand
Millers point to a sharp rise in yarn imports, particularly from India, as a major factor behind the crisis. BTMA data shows that yarn imports from India rose 48% over the past year, with Bangladesh now absorbing 46% of India’s total yarn exports.
According to industry estimates, Indian exporters benefit from multiple central and state-level incentives, giving them a cost advantage of around $0.30 per kilogram, allowing yarn to enter Bangladesh at prices local producers say are unsustainable.
At the same time, weak global apparel demand has reduced orders from garment factories, forcing spinning mills to cut production and sell yarn at a loss. Several mill owners report warehouse congestion, production cuts of up to 30%, and rising storage costs.
A senior mill owner said the local price of certain yarn counts has fallen sharply since February, resulting in sustained monthly losses and declining VAT payments to the government, signalling a broader fiscal impact.
Employment and investment at risk
BTMA estimates the textile sector directly employs around 2 million workers across spinning, weaving, dyeing, printing, and finishing. Of the sector’s 1,800 mills, 527 are yarn-manufacturing units, many of which are now operating below capacity or have suspended production.
Planned investments worth $3 billion, projected in 2022–23, have largely stalled following the 2024 downturn. Industry leaders warn that without corrective measures, Bangladesh risks losing hard-earned backward linkage strength and becoming increasingly import-dependent once again.
“If support is not restored, closures will continue, and job losses will accelerate,” Showkat Aziz Russell said. “The cost of inaction will be far higher than the cost of intervention.”
