Bangladesh textile manufacturers are losing business due to illegal yarn and fabrics imports and the misuse of bonded warehouse facility. Huge quantities of dresses including saris, three-pieces and other shirting clothes are entering Bangladesh illegally through border markets from neighboring countries. Spinning and weaving mills are sitting on stockpiles of yarn due to lack of demand. Operations in more than 40 per cent of the spinning and weaving mills have remained suspended. High interest rate of bank loans and increased price of gas are also cutting the competitiveness of the sector.

Falling yarn prices have hit spinners in Bangladesh. The country has a target of reaching $50 billion in textile exports by 2021. The size of the domestic fabric market is seven to eight billion meters. Local producers can supply only three to four billion meters and the rest of the demand is met by smuggled fabrics and bonded warehouse fabrics. Some businesses import 80 and 60 counts yarn, declaring those as 30 counts of yarn. Some businesses are said to be importing yarns and fabrics under the bonded warehouse facility and later on selling the duty-free items in the open market at low prices.