Kumar Bahukhandi
Bangladeshi textile mill owners have warned of a nationwide shutdown from February 1st. (Photo: Reuters)
Bangladesh’s garment industry is facing a major crisis. Domestic textile mill owners have warned that if the government does not make a decision on duty-free yarn imports by the end of January, spinning units across the country could shut down from February 1st
Bangladesh’s textile industry is going through a serious crisis. Domestic textile mill owners have warned that if the government does not reinstate duty-free imports of yarn by the end of January, production at spinning units across the country will be halted from February 1st.
The crisis deepened when the Bangladesh Ministry of Commerce recommended that the National Board of Revenue (NBR) suspend the duty-free facility for imported yarn under the bonded warehouse system. The government believes that the import of duty-free yarn has caused significant losses to domestic spinning mills. Meanwhile, manufacturers have been importing cotton yarn from India and polyester yarn from China for years because they are cheaper and of better quality. Domestic mill owners claim that the large-scale import of yarn from India and China has plunged the local industry into a deep financial crisis.
In the last 3-4 months, the gas crisis has cost the Bangladeshi textile industry approximately $2 billion. Gas shortages, irregular supply, and increased prices have reduced the production capacity of many spinning mills by up to 50 percent. Despite this, the government has not provided any gas subsidies or significant financial assistance. According to the Bangladesh Textile Mills Association (BTMA), the market is flooded with cheap Indian yarn, resulting in a stock pile-up worth over 12,000 crore taka. More than 50 mills have already shut down, leaving thousands of workers unemployed.
Mills Association’s Main Demands
The Bangladesh Textile Mills Association (BTMA) is demanding that the government end the duty-free import facility for 10-30 count cotton yarn, ensure subsidized and uninterrupted gas supply, provide temporary relief from VAT, reduce interest rates on bank loans, and engage in comprehensive dialogue with the government. According to government data, Bangladesh imported approximately 700 million kilograms of yarn in 2025, costing nearly $2 billion. 78 percent of this yarn came from India.
1 Million Jobs at Risk
The Bangladesh Textile Mills Association has warned that if spinning units shut down from February 1st, approximately one million jobs could be at risk, potentially leading to social unrest. This warning has been conveyed to the interim government, but no VAT relief has been announced yet.
Millers vs. Garment Exporters
The crisis has intensified the conflict between millers and garment exporters. Millers claim that the domestic industry can meet the entire demand, while the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) argues that local 10-30 count cotton yarn is more expensive and of lower quality than Indian yarn. According to exporters, stopping duty-free imports will increase production costs and weaken their global competitiveness.
Indian yarn exporter Amit Soti said that the termination of the bonded warehouse facility would have a direct negative impact on the Bangladeshi export industry. Bangladesh’s textile industry, a major source of employment and foreign exchange for the country, is at a very critical juncture. If the government there does not find a solution soon, the economic and social consequences could be severe.
