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Bangladesh’s Textile Backbone Is Cracking

• By  Textile Excellence
• January 03, 2026

Bangladesh’s textile millers have sought urgent government intervention, warning that the industry is edging towards a collapse after months of weakening demand, rising costs and intensifying import competition.

The Bangladesh Textile Mills Association (BTMA) said the sector, built over three decades as a vital backward linkage to the country’s export-driven garment industry, is facing its most severe stress in years. More than US$ 23 billion has been invested across spinning, weaving and processing, pushing capacity utilisation above 100% for cotton knit yarn and around 80% for woven yarn. However, business conditions have deteriorated steadily over the past year, with a sharp downturn in the last three months.

BTMA estimates that at least 58 spinning and dyeing units have fully or partially shut down. Several mills have tried to survive by leasing out facilities, but many are now operating at significantly reduced levels.

In response, industry representatives have stepped up engagement with policymakers, holding discussions this month with the National Board of Revenue and the finance and commerce ministries. BTMA president Showkat Aziz Russell has written to multiple government bodies outlining the scale of the crisis and calling for immediate corrective measures.

In a submission to the Ministry of Commerce, BTMA proposed a five-year special incentive of 10% on domestic yarn sales, up from the current 1.5%. It also sought a requirement that at least 50% of yarn used in export-oriented garment production be sourced locally, along with a temporary safeguard duty on imported cotton yarn.

Industry sources said local mills are being squeezed by the gradual withdrawal of incentives, rising input and energy costs, and stronger policy support extended by India to its yarn producers. Millers also flagged the leakage of duty-free yarn and fabric, imported under bonded warehouse schemes, into the domestic market, alongside illicit imports, which have eroded demand for local output.

The pressure has been compounded by a slowdown in global garment exports over the past four months, forcing many mills to sell below cost. With around 2 million jobs at stake across more than 1,800 textile units, BTMA warned that fresh investment is unlikely without swift and targeted government support.

The Bangladesh Textile Mills Association (BTMA) said the sector, built over three decades as a vital backward linkage to the country’s export-driven garment industry, is facing its most severe stress in years. More than US$ 23 billion has been invested across spinning, weaving and processing, pushing capacity utilisation above 100% for cotton knit yarn and around 80% for woven yarn. However, business conditions have deteriorated steadily over the past year, with a sharp downturn in the last three months.