Bangladesh’s textile sector is facing the prospect of a nationwide shutdown beginning February 1, as domestic spinning mill owners have warned that they will be forced to halt operations if the government does not withdraw the duty-free import facility for yarn by the end of January. Millers say the continued zero-duty import regime has pushed many local units to the brink, threatening widespread closures and job losses across the country.
The warning has intensified pressure on the interim government, particularly after the Ministry of Commerce formally wrote to the National Board of Revenue, recommending that the duty-free import facility for yarn under the bonded warehouse system be withdrawn. Domestic millers argue that allowing yarn imports without duties has severely distorted the market, undermined fair competition, and inflicted deep financial damage on local spinning units that cannot match the low prices of imported yarn.
For years, Bangladesh’s garment manufacturers and exporters have relied heavily on imported yarn, especially cotton yarn from India and polyester yarn from China, citing their competitive pricing and consistent quality. Local millers, however, contend that this long-standing dependence has come at the cost of the domestic textile industry, leaving spinning mills struggling to survive amid falling demand for locally produced yarn.
The crisis has been compounded by an ongoing gas shortage that has crippled production. Over the past three to four months alone, the textile sector is estimated to have suffered losses of nearly $2 billion due to erratic gas supply, rising energy costs, and production disruptions. Millers say that despite repeated requests, they have not been granted subsidised gas rates, and higher prices combined with unreliable supply have slashed production capacity by almost 50 percent in many factories.
According to the Bangladesh Textile Mills Association (BTMA), an influx of low-cost Indian yarn has flooded the domestic market, resulting in unsold inventories valued at more than Tk 12,000 crore. The association says over 50 textile mills have already shut down, leaving thousands of workers unemployed, while many surviving units are struggling to service bank loans as financial stress continues to mount.
Mill owners have outlined a series of demands they say are essential to prevent a complete collapse of the sector. These include the immediate withdrawal of the duty-free yarn import facility—particularly for 10 to 30 count cotton yarn—assured and uninterrupted gas supply at subsidised rates, temporary reductions in VAT collection during the crisis, lower interest rates on bank loans, and structured dialogue with the government to create a sustainable roadmap for the industry.
Official data shows that Bangladesh imported close to 70 crore kilograms of yarn in 2025, spending around $2 billion, with nearly 78 percent of these imports coming from India. Millers argue that such heavy dependence on imports has hollowed out domestic capacity and made local producers uncompetitive in their own market.
The BTMA has warned that if spinning units shut down from February 1, nearly one million workers across the country could be affected, potentially triggering serious social and economic unrest. The association says it has already conveyed these concerns to the interim government, but notes that no VAT relief or concrete support measures have yet been announced, further worsening the plight of mills burdened with unsold stock and shrinking output.
The standoff has also exposed a deep divide between textile millers and garment exporters. While millers insist that domestic yarn production is sufficient to meet national requirements if given a fair operating environment, the Bangladesh Garment Manufacturers and Exporters Association strongly disagrees.
Garment exporters argue that locally produced yarn—especially in the 10 to 30 count range—is significantly more expensive than imported Indian yarn. They also claim that international apparel brands prefer foreign yarn and fabrics due to superior quality and consistency, warning that restricting duty-free imports could erode Bangladesh’s competitiveness in the global apparel market.
Reflecting this view, Indian yarn exporter Amit Soti said that Bangladesh’s garment exporters currently benefit from bonded facilities that allow duty-free import of raw materials. He warned that suspending such imports would raise manufacturing costs, as locally produced yarn is costlier and, in his view, inferior in quality compared to Indian yarn, ultimately harming Bangladesh’s export-driven apparel industry.
As pressure mounts from both millers seeking protection and exporters demanding cost competitiveness, Bangladesh’s textile and apparel sector—one of the country’s largest employers and a crucial source of foreign exchange—has reached a critical juncture. Without a balanced and timely policy decision, industry stakeholders warn that the ongoing conflict could spiral into prolonged economic disruption and social instability.
