The Road Ahead Demands Modernization, Stronger Capabilities, And A Decisive Shift Toward Higher Value Production.
Mosammat Aklima, aged 27, learnt of her dismissal via text message. Like her 3,000 colleagues, this Bangladeshi garment worker has joined the tens of thousands who have been made redundant over the past two years in the struggling textile sector.
“I’m three months pregnant. It’s impossible for me to find another job… I don’t know what lies ahead,” says Ms Aklima, who used to earn up to $250 (€220) a month. Business at her factory, Lithe Garments in Baniachala- a major centre of the garment industry north of the Bangladeshi capital, Dhaka- began to slow in 2024.
Its closure underscores the crisis facing the world’s second-largest clothing exporter after China, which is grappling with a slowdown in exports and intensified competition, particularly from Vietnam. Over the past two years, some 400 factories have shut, according to the authorities and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
“They were unable to survive in a highly competitive market,” Mahmudul Hasan Babu, president of the BGMEA, told AFP. “Over the past 12 months, exports have fallen by nearly 1.5%.” Last year, they brought in roughly $39 billion, but the latest figures confirm a slowdown, particularly pronounced in Europe, the sector’s main market. According to Eurostat, imports of “made in Bangladesh” textiles into the EU fell slightly over the first five months of the year.
Decline in exports
In the United States, which accounts for nearly 20% of the sector’s exports, shipments also dipped at the start of 2026, before rebounding as China’s share of this market fell.
While manufacturers attribute the decline in activity partly to the conflicts in Ukraine and the Middle East, they also point to the structural weaknesses of an industry that accounts for nearly 80% of Bangladesh’s exports.
One key factor is a business model that has changed little since Bangladesh began exporting garments in the late 1970s. Industry figures, in a sector employing more than 4.5 million people, are calling for swift change to remain competitive against increasingly formidable rivals.“We have grown without planning and without putting the necessary infrastructure in place,” laments Mohiuddin Rubel, founder and managing director of Apparel Voice, a research and consultancy firm specialising in the garment industry.
“We have focused our efforts on basic items (T-shirts, jeans, five-pocket trousers, and classic shirts) rather than diversifying into items such as jackets, military uniforms or protective and medical clothing,” he continued. With rare exceptions, Bangladesh’s industry imports designs, fibres and sometimes even yarn, which its workers then assemble into garments. Investment in higher value-added activities, both upstream and downstream in the production chain, remains inadequate, Mr Rubel emphasises.
Dependence
The sector is now paying the price for this dependence on imported raw materials, according to industry representatives. Garments made from synthetic fibres typically sit at the premium end of the market. Yet Bangladesh is lagging in this niche, missing out on a significant share of demand. “Developing the country’s capabilities in the production of synthetic fibres and sportswear will be crucial to seizing future growth opportunities and increasing export revenues,” says a sewing thread expert who requested anonymity.
Bangladesh, a country of 170 million people, is also lagging in research and development, he points out. Furthermore, according to a World Bank study, 80% of the country’s ready to wear factories remain reliant on labour intensive production methods.
At the same time, Vietnam is making great strides towards a model based on productivity gains. Another major drawback, which low labour costs are no longer sufficient to offset, is the absence of free trade agreements with the EU, unlike its main competitors, Vietnam and India. Furthermore, last week the United States imposed new tariffs on around 60 countries, including Bangladesh. In total, clothing exports from Bangladesh are now subject to a tariff of 25.62%.