86The South Asian textile landscape is undergoing a significant realignment as intensifying trade barriers and regional competition fundamentally alter export trajectories. Historically the dominant force in mass-market apparel, Bangladesh is navigating a critical downturn, with export earnings declining for five consecutive months through December 2025. Data from the Export Promotion Bureau (EPB) reveals a sharp 14.25 per cent Y-o-Y decline in December shipments to $3.89 billion. This contraction is primarily driven by the United States’ imposition of a 35 per cent total duty on Bangladeshi goods - a 20 per cent reciprocal tariff on top of existing rates - which has eroded the nation’s traditional price advantage.
Tariff wars and market diversion
The US policy shift has triggered a massive diversion of trade. While Bangladesh struggles with the 35 per cent barrier, its primary competitors, China and India, face lower effective rates of 34 per cent and 27 per cent, respectively. This disparity has allowed Indian and Chinese exporters to adopt aggressive pricing strategies, specifically targeting the European Union to offset their own US volume losses. The global market is essentially being turned upside down, notes Mohammad Hatem, President, BKMEA. Consequently, Bangladeshi manufacturers are losing ground in the EU, where buyers are increasingly gravitating toward discounted offers from more economically resilient neighbors.
Strategic shifts toward technical excellence
To counter these headwinds, the focus within the Indian sector has moved toward value-added production and technological integration. Leading firms like Vardhman Textiles and KPR Mill are channeling investments into automated spinning and AI-driven quality monitoring to meet the EU’s stringent Digital Product Passport (DPP) requirements. Analysts project a 7–9 per cent revenue growth for the Indian spinning sector in 2026, buoyed by this tech-centric ‘China Plus One’ positioning. While Bangladesh faces the immediate challenge of LDC graduation and reduced incentives, the broader sector impact suggests that long-term survival now hinges on ESG compliance and technical sophistication rather than mere labor-cost arbitrage.
