The Bangladesh ready-made garment (RMG) industry is facing an unprecedented structural challenge as export momentum falters across both established and emerging frontiers. New data for the July–November period of FY 2025–26 reveals a 3.19 per cent Y-o-Y decline in non-traditional markets, with earnings slipping to $2.67 billion. This downturn is particularly alarming as it coincides with a 1.03 per cent contraction in the European Union, Bangladesh’s largest regional destination. While the US market showed a thin 3.06 per cent growth to $3.22 billion, exporters warn this is a ‘fragile recovery’ under the shadow of a new 20 per cent reciprocal tariff regime that took effect in August 2025.
The pivot to non-cotton and value-added segments
The sector’s internal dynamics show, knitwear exports have plunged by 6.34 per cent due to aggressive price-cutting from Indian and Chinese rivals, whereas woven garments have remained marginally resilient with 0.05 per cent growth. Industry leaders, including former Mohiuddin Rubel, Director, BGMEA, argue, the ‘cotton-dependency’ trap is the industry’s greatest vulnerability. Currently, 75 per cent of global apparel demand is for man-made fibers (MMF) and synthetic blends, yet these account for only 27 per cent of Bangladesh's shipments. To counter the 50 per cent reduction in government cash incentives and rising 14 per cent bank interest rates, factories are now being urged to fast-track investments in ‘smart’ functional fabrics and technical apparel to capture higher margins.
As the industry approaches its LDC graduation in 2026, the absence of an elected government and persistent labor unrest - totaling over 1,600 road blockades this year - have shaken buyer confidence. Beyond the factory floor, the struggle is becoming a matter of commercial diplomacy. Exporters are calling for the revitalization of overseas commercial wings to penetrate high-potential markets like Japan and Brazil, which showed rare growth of 0.98 per cent amidst the general slump. Without a coordinated move toward ‘circularity’ and a shift into the non-cotton segment, analysts warn that one-third of the country's mid-tier factories could face closure before the end of the next fiscal year.
As the apex trade body, BGMEA represents over 4,500 garment factories, acting as the primary negotiator between the industry, the government, and global retail giants.
