03/02/2026
The Bangladesh garments sector (RMG) is facing a severe crisis in early 2026, characterized by falling exports, rising production costs, and factory closures. Key issues include energy shortages (gas/electricity), weak global demand, and the urgent need to comply with EU environmental standards like the Digital Product Passport.
Key recent issues and trends include:
Production & Operational Challenges: A significant slowdown in business was reported between Oct-Dec 2025 due to falling yarn prices and high operational costs.
Energy & Supply Chain Issues: Unreliable gas and electricity supply has led to production delays, with some work orders shifting to other countries.
Market & Export Risks: The EU's new regulations on sustainability and digital product passports (DPP) threaten to disrupt trade, as they affect over 50% of Bangladesh’s apparel exports.
Financial Instability & Closures: Many, particularly smaller, factories are facing closure, causing job losses.
Raw Material Shortages: The Bangladesh Textile Millers Association (BTMA) has warned of shortages, asking for a ban on the export of garment waste to ensure supply for local recyclers.
LDC Graduation Pressures: As Bangladesh prepares to graduate from Least Developed Country (LDC) status, it faces the potential loss of duty-free access to the EU market.
To address these challenges, the sector is experiencing a shift toward man-made fiber (MMF) based garments, which saw a 14.1% growth, signaling a strategic pivo
Bangladesh Apparel Industry: Navigating Global Challenges ...
Bangladesh can overcome recent garment sector issues—including labor unrest, energy shortages, and impending LDC graduation—by diversifying products beyond cotton into man-made fibers (MMF), improving labor conditions/safety, adopting sustainable "green" technology, and increasing efficiency through automation. Focusing on high-value, sustainable apparel and strengthening buyer relationships is crucial for long-term competitiveness.
Key Strategies to Overcome Challenges:
Diversification and Upgrading: Shift from cotton-heavy products to high-value items like lingerie, sportswear, and functional fabrics to escape low-margin traps.
Sustainability and Compliance: Invest in eco-friendly, energy-efficient, and green technology to meet strict international environmental standards and retain major buyers.
Labor Relations and Safety: Address worker grievances regarding wages and safety to minimize disruptions from protests.
Technological Integration: Adopt Artificial Intelligence (AI) and automation to improve productivity, reduce waste, and manage the supply chain more efficiently.
Skill Development: Train the workforce to handle advanced machinery and higher-value production, reducing reliance on foreign experts.
Preparing for LDC Graduation: Actively seek new trade agreements to mitigate the loss of duty-free benefits post-2026.
These measures aim to address both immediate operational, financial, and labor issues as well as long-term structural changes in the global market.
