Bangladesh's textile and apparel growth engine is facing a fuel supply crisis. The Bangladesh Textile Mills Association (BTMA) recently submitted a list of demands to the Prime Minister's office, covering gas shortages, high borrowing costs, and heavy import duties on raw materials. The response was clear: the PM pledged to form an inter-ministerial task force to systematically address these structural issues that have long constrained the industry's competitiveness.
Energy and Finance: Two Bottlenecks Emerge
Bangladesh, the world's second-largest apparel exporter, has long struggled with unstable energy supply in its upstream textile segments—spinning, weaving, and dyeing. The BTMA delegation pointed out that insufficient gas supply directly reduces factory capacity utilization, forcing some mills to switch to more expensive alternative fuels, which erodes already thin processing margins.
At the same time, the financing environment is deteriorating. The central bank has raised benchmark interest rates multiple times over the past year to curb inflation, but textile companies report that commercial loan rates have climbed to double digits, far higher than those in competitors like India and Vietnam. High capital costs not only limit investment in technological upgrades but also weaken Bangladesh's price advantage in mid- to low-end fabric markets.
The tariff structure on imported raw materials was also flagged. BTMA argues that current import duties and surcharges on key inputs such as cotton and man-made fibers effectively increase procurement costs for downstream garment factories—contradicting the government's stated goal of promoting local fabric substitution.
PM's Pledge: From Policy Dialogue to Cross-Ministerial Execution
In response to the industry's concerns, the PM's commitment came with a clear timeline and execution path. She announced the formation of a special task force comprising relevant ministries, tasked with submitting a comprehensive reform plan covering energy, taxation, finance, and trade facilitation within 60 days. This move signals that the government is elevating the textile sector's demands from 'industry petition' to 'national agenda.'
Notably, the PM emphasized an export orientation toward 'high-value-added products.' Currently, Bangladesh's apparel exports remain heavily skewed toward basic cotton items (T-shirts, trousers, knitwear), with low unit value. The government aims to use policy levers to guide companies toward higher-margin categories such as functional fabrics, sportswear, and blended man-made fibers, thereby supporting the target of $50 billion in apparel exports by 2025.
Potential Impact on Global Textile Supply Chains
Policy adjustments in Bangladesh's textile sector will directly affect upstream raw material suppliers such as China and India. China exports significant volumes of cotton yarn, polyester filament, and fabric to Bangladesh each year. If Bangladesh lowers import tariffs on raw materials, Chinese suppliers' shipping costs will become more competitive, but they may also face fiercer regional price wars.
For international buyers, if Bangladesh achieves breakthroughs in energy and financing, its fabric self-sufficiency rate—currently around 40%—could gradually rise. This would shorten lead times and reduce reliance on third-party transit. However, in the short term, gas supply shortages remain a hard constraint. Bangladesh's domestic gas production has peaked, and LNG import infrastructure is not yet fully in place. For at least the next 12 months, factories will still face intermittent shutdown risks.