Staff Correspondent:

Despite strong growth in global markets, Bangladesh’s Ready-Made Garment (RMG) sector is facing renewed challenges.

Although the industry saw a 10% export growth over the past year, recent trade barriers imposed by the United States and India, coupled with domestic political instability, have put the sector under significant strain.

The garment industry accounts for nearly 80% of the country’s total exports and provides employment to millions.

However, on May 17, India imposed a ban on the import of several goods, including Bangladeshi garments, through land ports near the border. This move came in response to Bangladesh’s earlier restrictions on yarn imports through the same ports.

As a result, approximately 42% of Bangladesh’s exports to the Indian market have been affected, forcing exporters to use sea routes, which are both time-consuming and costly.

Meanwhile, the United States has imposed an additional 10% tariff on Bangladeshi products, which could increase to as much as 37%.

Although the U.S. International Trade Court has deemed this decision—originally made under Donald Trump’s administration—“unfair,” the tariff remains in effect.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), stated that a combination of local and global issues is pushing the sector into a severe crisis.

These include lack of policy support, shortages of gas and fuel, rising production costs, high interest rates, and trade barriers. Due to a shortfall in gas supply, production in many textile mills has dropped by 30% to 40%. Additionally, ongoing strikes and work stoppages by government employees have brought business activities to a standstill.

Analysts suggest that India’s recent trade measures stem from deteriorating India-Bangladesh relations following the resignation of Prime Minister Sheikh Hasina. The fallout has also led to the suspension of India’s transshipment facility for Bangladeshi goods, further hindering the global supply chain for RMG exports.

Former BGMEA president and Managing Director of Giant Group, Faruque Hassan, said, “The suspension of India’s transshipment facility has significantly increased both the cost and time required to ship products to many countries.”

According to BGMEA data, between January 2024 and March 2025, Bangladesh exported 34,900 metric tons of garments to 36 countries via India, valued at $462.34 million.

Since mid-2024, regular protests and strikes have erupted in Dhaka and other regions, with thousands of government employees and garment workers taking to the streets. Amid this political turmoil, Hatem alleges that the government has been unable to focus on trade policy.

Despite the instability, the sector managed to post a 10% export growth from July 2024 to April 2025, reaching a total of $32.64 billion—demonstrating the industry’s resilience. “Our entrepreneurs are working tirelessly. They are innovative, skilled, and have maintained the trust of international buyers,” said Hatem.

However, while large factories have been able to survive, small and medium enterprises (SMEs) have been hit hard. Faruque Hassan warned, “If small factories are not protected, it could lead to a major crisis in the future,” and expressed concern that the current growth trend might not be sustainable.

In light of the situation, business leaders have called for postponing Bangladesh’s scheduled graduation from Least Developed Country (LDC) status in November 2026. Graduation would mean losing duty-free access to many markets.

Nevertheless, the UK and EU will continue offering duty-free access for three more years, China for two years, and Canada until 2034. Distinguished Fellow of CPD, Mustafizur Rahman, emphasized, “We need to increase our competitiveness, diversify our products, and move towards signing free trade agreements.”