Bangladesh, renowned for its textile and garment manufacturing, is facing significant challenges as its reliance on imported yarn and fabrics increases. These challenges include rising costs, stiff competition, and changes in government policies. Below, we explore the key trends and their implications.

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Key Developments in Bangladesh’s Textile Industry

1. Rising Import Costs
   In 2024, Bangladesh’s cotton yarn imports surged by 39%, reaching $2.28 billion. Similarly, fabric imports by knitwear factories increased by 38%, costing an additional $2.59 billion.
2. Competition from India
   Over 80% of these imports came from India, which benefits from government incentives that make its textile exports more price-competitive.
3. Local Industry Struggles
   Despite investing $2 billion to expand capacity, local mills face increasing production costs (up 30% over two years), reduced government support, and challenges from illegal imports.
4. Price Discrepancies
   Local yarn prices often exceed those of imported alternatives. For example, one company saved $208,000 by importing yarn instead of purchasing locally.
5. Decreasing Local Market Share
   Local mills, once supplying 85% of yarn for knitwear exports, are losing ground to cheaper imports, resulting in a reduced market share.
6. Impact of Government Policies
   Policy changes, such as cutting cash incentives for using local yarn from 4% to 1%, have further discouraged manufacturers from sourcing locally.
7. Factory Closures
   Rising costs and declining demand have led to the closure of over 30 textile mills in the past year, with many others operating below capacity.
8. Dumping Allegations
   Claims of Indian yarn exporters selling below market value, aided by substantial government incentives, have prompted calls for anti-dumping duties.
9. Future Prospects
   Increasing dependency on imports raises concerns about the long-term sustainability of local mills as they struggle with tighter profit margins and growing competition.

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Challenges and Trends at a Glance

Aspect	Details	Impact
Import Growth	Yarn imports: +39% ($2.28 billion)	Increased import dependency.
	Fabric imports: +38% ($2.59 billion)	Higher costs for garment manufacturers.
Indian Competition	80%+ imports from India	Price advantages from government incentives.
Local Mills’ Investments	$2 billion in capacity expansion	Struggles with rising costs (+30%).
Price Gap	Imports save significant costs ($208,000 in one case)	Local mills lose competitiveness.
Government Incentives	Cash incentives cut from 4% to 1%	Local sourcing becomes less attractive.
Market Share	Local yarn share down from 85%	Imports dominate knitwear sector supply.
Factory Closures	30+ mills closed in one year	Job losses and reduced industrial output.
Dumping Allegations	Below-market pricing by Indian exporters	Calls for anti-dumping measures.

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Conclusion

Bangladesh’s textile industry stands at a crossroads. Rising import dependency, exacerbated by competitive pricing and reduced local incentives, threatens the long-term viability of domestic mills. Strategic government intervention, such as revisiting cash incentives and addressing dumping concerns, will be crucial to safeguard the local industry’s future.