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Dubai is fast evolving from a regional shopping hub into the central testing ground for global fashion expansion. The Emirate’s retail ecosystem is no longer defined solely by its iconic malls or tourist footfall; it has matured into a sophisticated laboratory where international and Indian brands alike can calibrate strategies for wider global reach.
In an exclusive discussion with ET Retail for the series Retail Beyond Borders, Nilesh Ved, Chairman of Apparel Group, dismantled the ‘Dubai Mall myth’, emphasizing that the city offers a far more complex and diverse opportunity than just high-profile locations. While digital commerce continues to dominate headlines, physical retail is experiencing an unexpected resurgence, with demand for premium floor space outstripping supply and creating a high-stakes environment for retailers.
Dubai-India corridor, a retail gateway
Dubai’s role as a conduit between Indian and global markets is increasingly clear. With a diaspora of roughly four million Indians, the UAE has become the most effective environment for Indian brands to assess international appeal before a wider rollout. Ved points out that Dubai attracts around 18 million international tourists annually, a figure that dwarfs India’s national foreign tourist arrivals. For brands, this concentrated, hyper-diverse audience provides a rare opportunity to adjust sizing, product lines, and style preferences for a global demographic while operating within a familiar cultural context.
Conversely, for Gulf-based brands entering India, Ved stresses the importance of a surgical, state-by-state approach, noting that India’s diverse consumer habits require highly localized strategies rather than a sweeping national launch.
Value fashion and athleisure, the new revenue engines
The commercial focus in Dubai’s retail space is increasingly centered on value fashion and athleisure, two segments that have moved from niche categories to primary revenue drivers. Consumer wardrobes now prioritize comfort, technical performance, and lifestyle functionality, creating demand for yoga wear, casual apparel, and hybrid work-leisure clothing.
To capitalize on these trends, leading retail groups are re-engineering backend operations. Ved highlights that supply chain compression reducing time between design, production, and shelf is now more crucial than chasing buzzwords. Apparel Group’s homegrown brand, R&B, exemplifies this shift. By leveraging accelerated buying cycles and efficient warehouse operations, the brand maintains high inventory turnover, illustrating that operational agility can be as decisive as front-end presentation.
Experiential flagships bridging physical and digital
The evolution of Dubai’s retail is also evident in the rise of experiential flagship stores. Rather than purely transactional spaces, these outlets serve as immersive brand showcases, offering experiences that e-commerce cannot replicate. Industry data suggests that while online platforms handle routine purchases, high-street flagships drive brand loyalty and larger transaction values. The challenge is the supply-side deficit: new mall deliveries are lagging behind demand, driving up occupancy costs.
Ved argues that physical retail is not merely surviving in this era it is transforming into a strategic bridge, enabling brands to move from regional dominance to global recognition through curated, immersive experiences.
Apparel Group’s expanding global footprint
Founded in 1996, Apparel Group is a multi-billion-dollar retail conglomerate operating over 2,300 stores across 14 countries. Its portfolio includes more than 85 international brands, such as Aldo, Skechers, and Tommy Hilfiger. The group is aggressively expanding into India and Southeast Asia, diversifying beyond fashion into real estate and grocery retail through a strategic partnership with Carrefour. This multi-pronged expansion underscores a larger trend: international retailers are increasingly treating Dubai not just as a sales hub but as a strategic testing ground for operations, supply chain optimization, and brand positioning on a global stage.
Dubai’s new retail reality
Dubai’s retail transformation signals a broader shift in global fashion strategy. For brands navigating an increasingly complex international landscape, the emirate offers concentrated consumer diversity, operational insights, and a laboratory for innovation. As Ved puts it, Dubai is not merely a mall city it is the central proving ground where global fashion strategies are honed before they go worldwide.
The Renewable Carbon Initiative (RCI) has released a definitive scientific report providing conclusive evidence, renewable carbon-based chemicals and materials significantly outperform fossil-based counterparts in reducing greenhouse gas (GHG) emissions. Conducted by sustainability experts at the nova-Institute and published on January 22, 2026, the study examines eleven peer-reviewed life cycle assessments (LCAs). The findings confirm that market-ready renewable solutions can achieve carbon footprint reductions ranging from 30 per cent to as much as 90 per cent, countering long-standing industry skepticism regarding the real-world climate benefits of alternative feedstocks.
Defossilization as a strategic industrial necessity
While the energy sector can often decarbonize through electrification, carbon-dependent industries such as chemicals and plastics require a different strategy: ‘defossilization.’ Because these sectors rely on carbon as a physical feedstock, the only viable path to net-zero is substituting fossil carbon with renewable sources, including bio-based, CO2-based, and recycled inputs. Fossil resources remain the primary driver of anthropogenic climate change, currently responsible for over 70 per cent of global warming. The RCI report underscores, introducing less additional fossil carbon into the cycle today directly reduces the future financial and technological burden of atmospheric carbon removal.
Transparent metrics drive investment and policy
The core of the report lies in its rigorous methodology, featuring case studies from global industry leaders including BASF, Avantium, Lenzing, and LanzaTech. By subjecting these LCAs to independent, third-party peer review, the RCI ensures a high level of scientific transparency that accounts for process emissions, energy requirements, and production scales. For example, a comparative analysis within the report demonstrates that Avantium’s PEF monolayer and PET/PEF multilayer bottles offer a superior environmental profile compared to traditional fossil-based PET. These data points provide the "solid evidence" required for policymakers to enact mandates and for institutional investors to de-risk the transition toward circular carbon loops.
Industry momentum and the renewable carbon initiative
The Renewable Carbon Initiative is a global coalition of more than 60 prominent companies dedicated to accelerating the transition away from fossil carbon. By focusing on scientific reporting and advocacy, the RCI bridges the gap between theoretical sustainability and industrial application. The group's latest research emphasizes that while alternative pathways are not automatically superior due to potential energy-intensive processes, the current market leaders have already optimized their technologies to deliver significant and verifiable climate gains
The January 20, 2026, inauguration of Ralph Lauren’s flagship store at Newport Beach’s Fashion Island represents a calculated move to deepen the brand's ‘key city ecosystem’ in Southern California. Beyond a standard retail expansion, the site marks the California debut of Ralph’s Coffee, the company’s signature hospitality concept. This integration of food and beverage into high-end retail is a strategic response to the growing demand for experiential luxury, where ‘third place’ environments - social spaces between work and home - drive prolonged foot traffic and enhanced brand affinity.
Hospitality as a catalyst for lifestyle retail
Originally conceptualized in 2014, Ralph’s Coffee has transitioned from a niche amenity to a vital component of the group's global revenue strategy. In Newport Beach, the café serves as a high-engagement entry point for the ‘Next Great Chapter: Drive’ strategy. By pairing organic coffee blends with an exclusive Newport Beach merchandise line, the brand capitalizes on the ‘premiumization’ trend sweeping the West Coast. Market data suggests, experiential anchors can increase in-store dwell time by up to 40 per cent, directly benefiting high-margin labels housed within the flagship, such as the Men’s Purple Label and Women’s Collection.
Financial resilience through ecosystem expansion
The expansion follows a robust fiscal performance, with Ralph Lauren reporting a 17 per cent Y-o-Y revenue growth to $2 billion in its most recent quarterly results. Operating in Orange County—a region with annual taxable retail sales nearing $876 million at Fashion Island alone—allows the house to hedge against broader macroeconomic volatility. By emphasizing full-price selling and reducing promotional reliance, the company achieved an adjusted gross margin expansion of 180 basis points. This new coastal location, with its Mediterranean-inspired tall arches and wrought-iron detailing, reinforces Ralph Lauren’s transition from a clothing manufacturer to a holistic luxury lifestyle authority.
Ralph Lauren Corporation is a global leader in premium lifestyle products across apparel, home, and hospitality. Operating iconic brands like Polo and Double RL, the company is currently executing a multi-year growth plan focused on high-potential "ecosystems" in global fashion capitals. With a strong digital presence and a pivot toward full-price retail, the house maintains a dominant position in North America and Asia, reporting a solid 10.5 per cent net profit margin for FY25.
At the World Economic Forum in Davos on January 21, 2026, environmental non-profit Canopy introduced a landmark $2 billion blended finance platform designed to transform India into a global hub for ‘Next Gen’ low-carbon materials. This strategic investment marks the first phase of a massive $78 billion global infrastructure transition aimed at eliminating forest-derived fibers from fashion supply chains by 2033. By leveraging India’s vast agricultural residues and textile waste, the initiative seeks to replace high-carbon wood pulp with circular alternatives, a move critical for brands navigating increasingly stringent global deforestation regulations.
Scaling circular capacity amid regulatory pressure
The blueprint targets the production of 1.5 million tons of next-generation paper, packaging, and man-made cellulosic fibers (MMCF) like viscose and rayon. This shift is no longer merely elective; with the EU Deforestation Regulation (EUDR) and similar norms in the US and UK tightening, Indian exporters face significant market-access risks if they remain tethered to traditional wood-pulp sources. Companies staying locked into business-as-usual wood sourcing are signing up for higher costs and supply vulnerability, states Nicole Rycroft, Executive Director, Canopy. The platform utilizes a blended finance model to de-risk early-stage facilities, pooling capital from philanthropies and private investors to catalyze commercial-scale production.
Socio-economic gains and industrial de-risking
Beyond decarbonization, the investment addresses critical localized challenges, such as the seasonal air pollution in Delhi caused by crop stubble burning. By diverting 100 million tons of agricultural waste into industrial feedstocks, the project aims to improve air quality while creating new income streams for rural communities. Currently, India produces roughly 8 million tons of textile waste annually, most of which remains underutilized. Zoe Caron, Strategic Lead-Global Investments, Canopy, noted, these targeted financial structures turn waste into high-value commodities, effectively future-proofing India’s $165 billion textile sector against the volatility of the global timber market.
Canopy is a global environmental non-profit dedicated to protecting the world’s forests by shifting supply chains toward sustainable alternatives. Working with over 950 global brands representing $2.1 trillion in revenue, the organization focuses on scaling ‘Next Gen’ solutions made from waste. Their current strategy involves mobilizing $78 billion by 2033 to modernize global textile and packaging infrastructure, with a primary growth focus on India’s circular economy.
The Indian textile and apparel sector entered a high-stakes transition on January 1, 2026, as the European Union (EU) formally suspended Generalised Scheme of Preferences (GSP) benefits for 87 per cent of Indian exports. This graduation triggers a shift to full Most Favored Nation (MFN) tariffs, effectively raising duties on apparel from a preferential 9.6 per cent to a standard 12 per cent. Global Trade Research Initiative (GTRI) data suggests, this 2.4 per cent margin hit is critical in a sector where net profits often hover between 3-5 per cent. Unlike competitors such as Bangladesh and Vietnam - which retain duty-free access via ‘Everything But Arms’ status or specialized FTAs - Indian manufacturers must now navigate a widening price gap of approximately 10-12 per cent in the European market.
The convergence of trade barriers
The timing of the GSP withdrawal creates a ‘double-jeopardy’ scenario for the industry. It coincides with the definitive tax phase of the EU’s Carbon Border Adjustment Mechanism (CBAM), introducing new compliance costs even as direct tariffs rise. While high-level negotiations for an India-EU Free Trade Agreement (FTA) are slated for a decisive breakthrough at the January 27 Summit in New Delhi, the legal ratification process implies a minimum 12-to-18-month lag before relief is realized. Exporters are currently caught in a transition valley, notes Ajay Srivastava, Trade Analyst. Until the FTA is operational, Indian garment houses face immediate pressure to either absorb these costs or risk losing shelf space to regionally more competitive suppliers.
India’s textile industry is the nation’s second-largest employer, contributing 2.3 per cent to GDP with an annual export value exceeding $34 billion. The EU remains its largest destination, accounting for nearly 17 per cent of total shipments. Current growth targets aim for $100 billion in exports by 2030, supported by the PLI 2.0 scheme.
The ASEAN+3 region - comprising the ten Southeast Asian nations plus China, Japan, and South Korea - is projected to maintain a steady growth trajectory of 4.0 per cent in 2026, according to the latest AMRO Regional Economic Outlook released on January 21, 2026. While this marks a slight moderation from the 4.3 per cent growth estimated for 2025, the region’s retail and apparel sectors are emerging as primary beneficiaries of ‘friend-shoring’ and robust domestic demand. With regional inflation contained at a projected 1.2 per cent, consumer purchasing power remains resilient, providing a stable foundation for the fashion industry’s ongoing premiumization.
Strategic near-shoring and retail diversification
The ‘China Plus One’ strategy continues to redirect massive Foreign Direct Investment (FDI) into Southeast Asia’s manufacturing hubs. Vietnam is forecasted to lead the region with a staggering 7.6 per cent GDP growth in 2026, solidifying its role as a premier destination for high-value garment and textile production. This industrial shift is mirrored in the retail landscape, where major players are capitalizing on a burgeoning middle class. Data indicates,by 2026-end, ASEAN will account for one in six households entering the global ‘consuming class,’ a demographic shift that is driving international fashion labels to expand their physical footprints in Tier I cities across Indonesia, Thailand, and Malaysia.
Navigating trade volatility through integration
Despite the positive outlook, the sector faces headwinds from unpredictable global trade policies and the potential broadening of protectionist measures. To mitigate these risks, Dong He, Chief Economist, AMRO emphasizes the urgency of deepening regional economic integration. By leveraging the Regional Comprehensive Economic Partnership (RCEP), apparel manufacturers are reducing their dependence on high-tariff Western markets and pivoting toward intra-regional trade. This ‘regionalization’ of the supply chain not only cushions against external shocks but also aligns with the growing consumer demand for localized, sustainable fashion that minimizes long-haul logistics emissions.
The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization tasked with ensuring the macroeconomic and financial stability of the ASEAN+3 region. Based in Singapore, AMRO provides critical surveillance and technical assistance to its member states. Historically established after the Asian Financial Crisis, the office now serves as the primary data hub for regional growth plans, monitoring a $30 trillion collective economy and its high-growth sectors like digital retail and advanced manufacturing.
In a high-stakes appeal for the survival of India’s garment sector, the Apparel Export Promotion Council (AEPC) has formally approached the Vice President of India, C.P. Radhakrishnan. The industry body is seeking an immediate resolution to an escalating India-U.S. tariff dispute that threatens to dismantle the nation’s textile export framework.
Apparel sector pushed to the brink
The Council’s plea highlights a critical situation triggered by recent U.S. trade actions, specifically the imposition of a 25% tariff alongside an additional 25% oil-related penalty. These measures have caused severe disruption to India’s textile exports, particularly because the U.S. serves as the largest single market for Indian apparel. For many major exporters, the American market accounts for approximately 70% of their total business, making the impact of these tariffs catastrophic.
The industry is currently struggling with structural constraints that make it impossible to absorb these costs. AEPC Chairman Dr. A. Sakthivel noted that the sector operates on incredibly thin margins and faces a long-term production cycle consisting of a six-month development period and four months of work-in-progress inventory. Furthermore, with wage costs making up 30% of the industry’s expenses, the majority of which are fixed, exporters lack the financial flexibility to withstand prolonged tariff shocks.
The cost of national interest
In an effort to protect exports and maintain production continuity, Indian exporters have already taken the drastic step of absorbing a 25% price reduction equivalent to the U.S. oil penalty. While this was done in anticipation of a swift treaty resolution, it has effectively wiped out profits and depleted the industry's financial reserves. The Council warned that while this strategy was intended as a short-term bridge to retain U.S. customers, it is no longer sustainable.
The risk is now escalating as U.S. buyers begin to withhold or cancel new orders, unwilling to risk mid-cycle tariff increases. The AEPC emphasized that further tariff absorption is commercially impossible and passing these costs on to buyers is not a viable option. Diversifying into alternate markets is also ruled out as a short-term solution because textile sourcing is deeply embedded in long-term supply chains, requiring two to three years for new buyer onboarding and compliance audits.
A call for immediate action
The consequences of continued inaction are described as dire, ranging from immediate factory shutdowns and large-scale job losses to the irreversible loss of U.S. market share to competitor nations. The AEPC argues that competitor nations with preferential trade access are already positioned to replace India if this crisis persists.
Consequently, the Council has requested that the Vice President refer the matter to the Government of India for the fast-tracking of India-U.S. tariff negotiations. Specifically, the industry is seeking the immediate conclusion of a tariff treaty or, at the very least, an interim relief mechanism to restore buyer confidence and protect ongoing commitments. The AEPC concluded its appeal by stating that there is no further shock-absorption capacity left in the sector, and a delay of even three to six months could cause permanent damage to this strategic industry.
As Finance Minister Nirmala Sitharaman prepares to table the Union Budget 2026 on February 1, few sectors are watching the clock as closely as textiles and apparel. Employing more than 45 million people directly and supporting millions more indirectly, the industry stands at a moment of deep uncertainty and latent opportunity. A fragile global recovery, the shock of a steep 50 per cent tariff on Indian exports to the US effective August 2025, and the steady advance of duty-free competitors have exposed structural vulnerabilities that incremental policy tweaks can no longer mask. What the sector is seeking from Budget 2026 is not relief alone, but a fundamental re-weaving of India’s competitiveness in global and domestic markets alike.
A world redrawn by trade and tariffs
The external environment confronting Indian exporters in 2026 resembles a high-stakes chessboard. Since August 27, 2025, shipments to the US, India’s single largest apparel export destination have been hit by a 50 per cent reciprocal tariff. The impact has been immediate and visceral. In Ludhiana’s winterwear units and Tiruppur’s knitwear factories, orders have slowed, buyer negotiations have grown brittle, and margins that were already thin have been pushed to the edge. For many MSMEs, the tariff shock has not merely reduced profitability; it has raised existential questions about survival.
Yet even as one door narrows, another appears to be opening. Negotiations for the India-EU Free Trade Agreement are expected to conclude by January 27, 2026, and for the textile sector, the timing could not be more critical. Mukesh Kansal, Chairman, CTA Apparels, sees it as far more than a tariff adjustment. In his view, duty-free or reduced-duty access to the EU would recalibrate India’s cost structure vis-à-vis countries that currently enjoy preferential access, while also reinforcing India’s credibility as a compliant and responsible sourcing hub. This matters profoundly in a European market increasingly shaped by sustainability mandates, traceability requirements, and ethical sourcing norms. In effect, the FTA offers India a chance to pivot from being merely competitive on price to being indispensable on trust.
Large exporters echo this emphasis on continuity and predictability. Pearl Global Industries, which reported a 12.7 per cent year-on-year revenue growth to Rs 2,541 crore in the first half of FY26 despite global headwinds, illustrates what scale and diversification can still achieve. Group CFO Sanjay Gandhi argues that progress on FTAs with the EU and the UK could act as a powerful catalyst just as global demand begins to normalize. However, he is equally clear that trade agreements alone are insufficient. Without stable policies, efficient logistics, and sustained investment in skilling, India risks squandering the very opportunities that geopolitical realignments are creating.
The domestic force behind the Viksit Bharat vision
While exports dominate headlines, domestic consumption remains the industry’s most reliable anchor. India’s aspiration of becoming a Viksit Bharat rests heavily on sustaining a virtuous consumption cycle, and textiles sit at the heart of that equation. Gautam Singhania, Chairman and Managing Director of Raymond Group, has repeatedly underscored that policies supporting consumer sentiment and disposable incomes can generate a meaningful multiplier effect across retail, manufacturing, and employment.
This dual dependence on domestic demand and export competitiveness is captured in the industry’s medium-term projections.
Table: India’s textile & apparel market projection (FY25-FY30)
|
Segment |
Market size (2024-25) |
Projected size (2029-30) |
Growth drivers |
|
Total Market |
$178 bn |
$350 bn |
Domestic Consumption & MMF |
|
Exports |
$38 bn |
$100 bn |
FTAs (EU, UK) & PLI 2.0 |
|
Employment |
45 mn (firect) |
60 mn+ |
PM MITRA Parks & MSME scaling |
Source: Invest India & CITI, January 2026
The numbers tell a story of ambition tempered by conditions. Doubling the total market to $350 billion within five years assumes not just rising incomes but a decisive shift toward man-made fibres, where India has historically lagged despite global demand skewing strongly in their favor. Similarly, the leap from $38 billion to $100 billion in exports hinges on the successful conclusion and implementation of FTAs, alongside the effectiveness of schemes such as PLI 2.0. Employment growth to over 60 million, meanwhile, rests on whether mega infrastructure initiatives like PM MITRA Parks can genuinely integrate MSMEs into globally competitive value chains rather than remaining islands of large-scale manufacturing.
The industry’s call for stability and modernisation
It is against this backdrop that the Confederation of Indian Textile Industry (CITI) has framed its pre-Budget memorandum. Rather than a laundry list of incentives, CITI’s submission reads as a blueprint for futureproofing a sector that must adapt to volatile commodity cycles, tightening sustainability norms, and shifting trade regimes. Chairman Ashwin Chandran situates textiles as central to the Viksit Bharat goal, arguing that its labour intensity and export potential make it uniquely suited to inclusive growth.
At the core of CITI’s argument lies raw material volatility. Cotton prices, buffeted by global supply shocks and domestic policy distortions, have eroded predictability for spinners and garmenters alike. The proposal to remove the 11 per cent import duty on cotton and to establish a Cotton Price Stabilisation Fund is less about cheap imports than about aligning domestic prices with international realities. Without such alignment India risks undermining its own competitiveness at the very first stage of the value chain.
Sustainability forms the second pillar of the industry’s expectations. As global buyers tighten carbon and compliance benchmarks, especially in Europe, MSMEs face the paradox of needing to invest in green technologies without access to affordable capital. A dedicated Green Technology Scheme, as proposed by CITI, could bridge this gap, enabling smaller units to transition to clean energy and resource-efficient processes without being priced out of global markets.
The third pillar is infrastructure and technology. With the Technology Upgradation Fund Scheme (TUFS) effectively exhausted, the call for a National Textile Fund reflects the industry’s recognition that modernization cannot be episodic. Continuous upgrading of machinery, logistics, and digital capabilities is now a baseline requirement rather than a competitive edge.
Tiruppur, a cluster under pressure, a mirror of the future
Few places illustrate the stakes of Budget 2026 as vividly as Tiruppur. Producing nearly 70 per cent of India’s knitwear exports, the cluster has been described by many exporters as ground zero of the US tariff shock. For MSMEs operating on wafer-thin margins, the sudden loss of price competitiveness has felt like a death knell. Orders have shifted to countries with preferential access, and cash flows have tightened to the point where even compliance investments feel out of reach.
Yet Tiruppur also reflects the sector’s resilience and capacity for reinvention. Entrepreneurs like Tejasvi Madan, Founder direct-to-consumer label Beyond Bound, views the Budget not merely as a relief package but as an inflection point for India’s fast-moving apparel ecosystem. Her call for a uniform GST structure speaks to the daily frictions that startups face, where inverted duty structures distort pricing and working capital. Equally significant is her emphasis on focused incentives for women-led enterprises, aligning India’s policy framework with the ethical and diversity benchmarks increasingly demanded by global buyers.
A budget that decides the industry’s trajectory
As India sets its sights on a $350 billion textile and apparel industry by 2030, the Union Budget 2026 will play a defining role in shaping the path ahead. Decisions on raw material duties, trade support mechanisms, infrastructure funding, and tax rationalization will collectively determine whether India remains trapped in a low-cost manufacturing paradigm or evolves into the world’s preferred hub for high-value, sustainable apparel.
The stakes extend beyond balance sheets and export targets. For millions of workers, clusters, and entrepreneurs, the Budget will signal whether policy is prepared to match rhetoric with structural reform. In that sense, February 1 is not merely a fiscal milestone. It is a moment when India must decide how it intends to weave its textile future into the fabric of a changing global economy.
The global textile sector is entering a new era of accountability as the ‘green-washing’ era ends and the age of digital verification begins. With the global organic cotton fabric market projected to grow from $454 million in 2025 to $647 million by 2032, the pressure to eliminate fraud is at an all-time high. Leading this charge, Oeko Tex has partnered with TextileGenesis, a Lectra company, to replace vulnerable paper-based records with a secure, digital chain of custody.
Tokenization: The new standard for fiber integrity
Central to this alliance is the implementation of Fibercoin technology. This system assigns a unique digital token to every physical kilogram of certified organic material. As the cotton moves from Indian ginning mills to Bangladeshi garment factories, these tokens mirror the physical flow, preventing the ‘double-counting’ often found in manual systems. Amit Gautam, CEO, TextileGenesis, notes, this digital twin approach effectively ‘eliminates the reliance on PDF transaction certificates,’ which have historically been susceptible to manipulation.
Regulatory compliance and market valuation
This digitization is a strategic response to the EU’s Green Claims Directive and Digital Product Passport (DPP) requirements coming into effect throughout 2026. For manufacturers, the stakes are high: the organic textile industry is forecast to reach a staggering $305.73 billion by 2035, growing at an 18 per cent CAGR. By integrating Oeko-Tex’s rigorous GMO testing with real-time digital tracking, brands can now substantiate sustainability claims with auditable data, securing their position in a high-premium, eco-conscious market.
Oeko Tex is a premier international association of 17 independent research and testing institutes. Specializing in chemical safety and ecological textile certifications, the organization issued over 57,000 certificates in the last fiscal year. Its growth strategy focuses on digitizing the Oeko Tex Organic Cotton standard to meet 2026 Global Transparency Mandates.
A recent recommendation by the Ministry of Commerce to withdraw bonded warehouse facilities for 10–30 count cotton yarn has triggered significant instability across Bangladesh’s textile and apparel sectors. This move, which effectively imposes an estimated 40 per cent cumulative duty on imports, has been met with sharp resistance from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the BKMEA. Industry leaders describe the policy as a ‘unilateral decision’ that prioritizes upstream spinning mill interests over the downstream garment sector, which accounts for over 80 per cent of national export earnings. The dispute comes as apparel exports already contracted by 2.63 per cent during the July–December 2025 period, with a staggering 14.23 per cent plunge recorded in December alone.
Operational disruption and cost escalation
The fiscal impact of this policy shift is substantial. Currently, Bangladeshi spinning mills sell 30-card yarn at approximately $3.00 per kg, while Indian manufacturers supply equivalent quality for $2.60 - a 40-cent differential that exporters claim is critical for global price parity. The withdrawal of bonded facilities at this juncture could be a death warrant for the knitwear sector, states Mohammad Hatem, President, BKMEA. Conversely, the Bangladesh Textile Mills Association (BTMA) has threatened an indefinite shutdown of all textile mills starting February 1, 2026, if the protections are not enforced, citing unsold inventory worth Tk 120 billion and the ‘dumping’ of cheap foreign yarn.
Strategic risks and market outlook
Beyond immediate production costs, economists at the CPD warn of broader geopolitical repercussions. Restrictions on land-port imports from India have already contributed to a 6.5 per cent decline in Bangladesh’s regional exports. As Vietnam secures zero-duty access to key markets via new Free Trade Agreements, the additional 33 per cent to 40 per cent tax burden on raw materials could drive international buyers toward more stable competitors. The government now faces the challenge of balancing long-term industrial security for domestic spinners with the immediate survival of the nation’s premier export engine.
The RMG sector is Bangladesh’s economic backbone, employing 4 million workers and targeting $44.49 billion in exports for FY26. While domestic spinning meets 90 per cent of knitwear yarn demand, the industry relies on imports for high-count woven fabrics. Current growth is challenged by 14 per cent export dips and rising energy costs, necessitating a shift toward high-value technical textiles.
