Bangladesh is the world's second-largest garment exporter, with the textile industry a crucial pillar of its economy. In 2024, Bangladesh's total garment exports reached US$38.48 billion, with the EU and the US as core markets, contributing nearly 70% of the total (EU 50.34%, US 18.72%). However, in recent weeks, Bangladesh's textile industry has suffered a major blow, with textile companies across the country facing complete shutdown.
On January 22, the BTMA (Bangladesh Textile Industry Association) announced a major policy decision: to close all textile factories nationwide starting February 1, without specifying a resumption date. At the time, the BTMA chairman stated that this was not a threat, but a genuine "national crisis"-the textile industry's capital had shrunk by more than half, companies were unable to repay bank loans, approximately 50 factories had already closed ahead of schedule, and the remaining capacity utilization rate was only 50%, with the entire industry teetering on the brink of insolvency. On January 29th, the Bangladesh Textile Mills Association (BTMA) suddenly announced the suspension of the nationwide indefinite closure of textile mills-a crisis that had shaken the global textile industry and impacted the global fast fashion supply chain-temporarily putting a halt to the nationwide production shutdown. While the crisis has been temporarily averted, problems remain, and Bangladesh, a major textile producer, stands at a crossroads.
Besides the textile industry, one of the biggest news stories about Bangladesh in the past two years has likely been the 2024 coup that led to the removal of then-leader Sheikh Hasina from power. Since January 22nd, 2026, the Bangladesh National Assembly elections have been underway, with the official vote scheduled for February 12th. This latest election since the unrest in Bangladesh will determine the country's development direction for the next few years. As a pillar industry of Bangladesh, textiles have experienced rapid growth since 2018 through attracting foreign investment. However, this growth has also encountered various problems, and last year's announcement of retaliatory tariffs by the US government further exacerbated existing tensions. As of January 29, over 50 small and medium-sized spinning mills in Bangladesh had permanently closed prematurely due to the influx of low-priced yarn from India, soaring energy costs (natural gas prices are 80% higher than in 2023), and a massive inventory buildup of hundreds of billions of taka, leading to financial difficulties. These mills represent 12% of the country's total spinning capacity. Meanwhile, foreign-owned factories, accounting for 35% of Bangladesh's spinning capacity, remained largely stable. Leveraging automation technology and long-term orders from major garment brands, most continued operations, with only some experiencing capacity utilization rates dropping to 60%. Furthermore, the national elections, public holidays, and Eid al-Fitr will significantly reduce working days in February and March. Although factories may only operate for 35 days out of the 60-day period, nearly double salaries will be required in March, including regular wages, bonuses, and advance payments, further exacerbating the already difficult situation for Bangladeshi textile companies. This nationwide shutdown, while later lifted, served as a political statement from the industry during the election campaign, effectively conveying the industry's message.
However, in 2026, Bangladesh's textile industry not only faces internal challenges but also fiercer external competition, primarily from India. Recently, India reached two important tariff agreements with the US and the EU, reducing tariffs on Indian exports to the EU to zero and on US exports to 18%. While the tariff agreement with the US involved significant concessions, it will undoubtedly boost Indian textile exports, as the US and EU are core markets for Bangladeshi garment exports. India and Bangladesh are geographically close and both are populous countries. Although Bangladesh has a certain first-mover advantage in the textile and apparel sector, its political instability in recent years and future policy uncertainty have become negative factors. The current shutdowns in Bangladesh's textile industry are far from the end of the crisis; even greater challenges lie ahead.
