Bangladesh’s earnings from readymade garment (RMG) exports rose to $3.89 billion in July2026, reflecting a slight 1.92 per cent year-on-year decline from $3.96 billion recorded in July 2025. Despite the minor contraction, exports demonstrated a sharp sequential recovery, rebounding 14.73 per cent M-o-M compared to June’s $3.38 billion baseline. Category-wise data from the Export Promotion Bureau (EPB) highlights, woven apparel shipments contracted by 3.16 per cent year-on-year, whereas knitwear exports proved significantly more resilient, slipping just 0.90 per cent to $2.15 billion on strong global demand for basic activewear and sweaters.

Domestic gas shortages and freight surcharges hamper mill utilization

Widespread natural gas supply constraints across key industrial clusters in Gazipur and Narayanganj continue to restrict manufacturing capacity utilization, driving up unit production overheads and delaying delivery schedules. Furthermore, geopolitical supply chain disruptions along international shipping lanes have inflated ocean freight tariffs for garment exporters. While high historical comparison bases and severe industrial gas shortages created temporary headwinds in July, robust demand in non-traditional markets like India and steady US order inflows signal underlying structural strength, notes Fazlee Shamim Ehsan, Executive President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Targeting $100 billion in export earnings by 2030

Accounting for over 80 per cent of national export earnings, Bangladesh’s RMG sector supplies woven and knit apparel to major European, North American, and Asian retail chains. Established in the late 1970s, the sector targets $100 billion in annual export earnings by 2030 through green factory modernization and product diversification.

To modernize production capabilities across decentralized manufacturing hubs, Tamil Nadu inaugurated two new mini textile parks at Kodangipatti and Uppidamangalam in Karur district. Under the state government’s Mini Textile Park Scheme, which funds up to 50 per cent of eligible project costs capped at Rs 2.50 crore per project, the initiative provides micro, small, and medium enterprises (MSMEs) with shared effluent management, warehousing, and advanced weaving utilities. The state has sanctioned 19 mini textile parks overall, including eight allocated exclusively to Karur to transition local manufacturers from fragmented job-work operations to consolidated, high-throughput exporters.

Direct export access counters rising supply chain overheads

Developing common manufacturing infrastructure addresses critical operational bottlenecks, including rising energy tariffs, capital scarcity, and strict international compliance standards. Complementing the park launches, a Reverse Buyer-Seller Meet organized by FaMeTN and SICCI in Karur yielded 53 Memorandums of Understanding (MoUs) worth Rs 12 crore with 25 international buyers. Providing standardized industrial amenities and direct buyer linkage allows smaller handloom and powerloom operators to cut unit overheads and fulfill high-volume global retail orders, states M Vijay Balaji, Minister for Handlooms, Textiles and Khadi.

Karur home textile industrial cluster framework

Renowned historically for handloom craftsmanship, Karur has evolved into India's premier home textile manufacturing hub, exporting over Rs 6,000 crore annually in kitchen linens, bedspreads, and soft furnishings to Europe and North America. Supported by state infrastructure subsidies, the cluster aims to achieve 15 per cent annual export growth through modern dyeing technologies and sustainable manufacturing practices.

Addressing the India–Uzbekistan Business Forum in New Delhi, Union Minister of Commerce and Industry Piyush Goyal called for joint manufacturing to leverage Uzbekistan’s cotton fiber output alongside India’s design, processing, and garment export infrastructure. Annual bilateral trade crossed $1.5 billion, with both governments targeting $3 billion over the next three years. Enforced in May 2025, the India–Uzbekistan Bilateral Investment Treaty provides a predictable regulatory environment, enabling textile mills to establish co-located spinning and apparel units aimed at European and Asian retail markets.

Shared sourcing networks counter supply chain fragmentation

As global apparel buyers demand supply chain transparency and fiber security, joint ventures in yarn spinning, fabric finishing, and value-added garmenting offer structural margin advantages. Combining Uzbekistan's fiber strengths with India's manufacturing expertise allows both nations to co-invest, co-manufacture, and co-innovate for global markets, states Piyush Goyal,Union Minister of Commerce & Industry.

Nevertheless, mitigating overland transit bottlenecks across Central Asian transit corridors and reducing non-tariff regulatory barriers remain essential operational goals for trade delegations on both sides.

Strategic Central Asia–South Asia textile initiative

Originating under the 2011 strategic framework, the India–Uzbekistan textile alliance coordinates raw fiber sourcing, yarn processing, and garment production across Eurasian markets. Backed by the Bilateral Investment Treaty, the initiative targets a $3 billion trade threshold by 2029 through capital co-investments and integrated customs logistics.

Escalating maritime tensions along Middle East shipping lanes have disrupted raw material dynamics for India’s synthetic textile supply chain. Middle Eastern supply constraints and elevated ocean freight rates pushed Monoethylene Glycol (MEG) import parity higher across Asian processing hubs. Simultaneously, crude oil-linked Paraxylene (PX) cost increases lifted Purified Terephthalic Acid (PTA) spot prices across domestic manufacturing clusters. This dual pressure elevated input costs for Indian polyester staple fiber (PSF) and polyester filament yarn (PFY) spinners by 4.8 to 5.5 per cent, establishing a higher baseline cost for downstream weavers.

Downstream weavers face margin erosion amid narrowing import spreads

Historically, domestic garment manufacturers depended on cheaper imported Chinese synthetic fibers to buffer local feedstock inflation. However, tight domestic inventories in China - driven by capacity rationalization - have narrowed the traditional import price gap faster than expected. Spinning mills in Surat and Ludhiana face elevated replacement costs while attempting to pass price increases to price-sensitive garment exporters. Volatile raw material costs and fluctuating ocean freight rates are squeezing operating margins for non-integrated synthetic yarn spinners," states Ramesh Kumar, Senior Market Analyst at Synthetic Apparel Insights. Securing steady domestic feedstock supply remains a critical priority for textile mills navigating international trade disruptions.

India's synthetic textile industry produces over 10 million tons of polyester fiber, filament yarns, and blended fabrics annually for domestic retail and global export markets. To counter raw material price volatility, domestic spinners are increasing investments in recycled polyethylene terephthalate (rPET) processing and integrated yarn capacity to safeguard long-term operating margins.

Italian luxury fashion house Salvatore Ferragamo swung back to profitability in H1, FY26, delivering €1.5 million in net profit compared to an adjusted loss of €16 million during the prior-year period. Direct-to-consumer (DTC) sales expanded by 6.6 per cent at constant currencies in Q2, FY26, driving group revenues to €259 million. Improved store traffic, higher average transaction values, and reduced markdown periods boosted core operating profit by nearly 25 per cent to €90 million. Turnaround efforts are showing tangible results across our directly owned boutiques, driven by higher full-price sell-through rates, notes Ernesto Greco, Board Member and Advisory Committee Member.

Operational discipline mitigates wholesale volatility

To shield brand equity amid softening wholesale demand across North America and East Asia, Ferragamo is trimming third-party distribution and curbing off-price liquidation. The Florentine house is evaluating targeted inventory buybacks from wholesale partners to maintain strict pricing integrity. Coupled with strategic stock-keeping unit (SKU) rationalization and tighter inventory management, the brand is strengthening gross margins while positioning its core footwear and leather goods lines for sustainable recovery across global markets.

Iconic Italian luxury footwear and leather house

Founded in 1927 in Florence, Italy, Salvatore Ferragamo crafts luxury footwear, leather goods, and ready-to-wear apparel. Serving high-net-worth consumers across Europe, North America, and Asia, the group targets sustained profit recovery through direct-to-consumer expansion, supported by solid net liquidity of €144 million.

Textile manufacturer Sportking India registered a 122.8 per cent Y-o-Y growth in net profit to Rs 75.97 crore in Q1 FY27, backed by a 20.1 per cent increase in operational revenue to Rs 703.68 crore. The company’s operational efficiency and reduced finance costs expanded EBITDA margins by 693 basis points to 18.8 per cent. Their quarterly performance reflects solid volume consistency and improved product realizations, positioning us to capitalize on strengthening demand across domestic retail and key export corridors, states Munish Avasthi, Chairman and Managing Director.

Value addition anchors Greenfield manufacturing push

To leverage shifting global sourcing preferences and imminent trade pacts such as the India–UK Free Trade Agreement, the Ludhiana-headquartered firm is deploying Rs 1,000 crore toward a greenfield facility in Odisha. Concurrently, board-approved mergers with Marvel Dyers and Sobhagia Sales will consolidate downstream dyeing and garment manufacturing. This vertical consolidation addresses regional supply chain volatility, enhancing yarn-to-apparel throughput and gross margins.

Expanding garmenting capacity for long-term returns

Established in Punjab, Sportking India manufactures cotton yarns, processed fabrics, and casualwear for major domestic brands and export destinations across Europe and Asia. Supported by annual revenues above Rs 2,500 crore, current capital investments target integrated garmenting capacity to sustain long-term return metrics.

Rising summer temperatures across Western export markets are driving global apparel brands to expand lightweight, breathable linen lines. Capitalizing on the recent removal of Bangladesh’s 35 per cent import tariff on raw flax fiber, local manufacturers are scaling integrated linen spinning and circular recycling operations to cut reliance on imported woven fabrics. Leading this structural shift, NZ Tex Group is expanding its 6,700-spindle wet-spinning capacity while integrating mechanical waste recovery to capture post-industrial linen remnants.

Overcoming wet-spinning complexities through closed-loop efficiency

Unlike traditional cotton processing, wet spinning linen demands four times the initial capital investment alongside specialized effluent treatment systems. Continuous moisture exposure also accelerates component wear, requiring machinery overhauls every seven years. To optimize resource use, NZ Tex Group implemented closed-loop water recovery alongside mechanical fiber recycling, converting production waste into high-value blended yarns. Securing policy parity for raw flax allows Bangladeshi mills to build localized, fully circular linen ecosystems, says Saleudh Zaman Khan, Managing Director,  NZ Tex Group. Uninterrupted grid power remains critical for mills to sustain these capital-intensive wet-spinning operations.

Founded in 1982, NZ Tex Group is a Bangladeshi textile conglomerate producing 52,000 tons of yarn and 72 million yards of woven fabric annually for European and Asian markets. Pioneering domestic 100 per cent linen spinning 16 years ago, the group aims to double circular flax output backed by steady double-digit export growth.

Profits are taking precedence over physical expansion in global apparel retail today. Years of building extensive store networks are giving way to a leaner operating model as fashion retailers adapt to slow discretionary spending, rising operating costs and rapid growth of ecommerce. H&M Group's latest half-year result for fiscal 2026 reflects this shift. Rather than pursuing aggressive store expansion, the Swedish fashion retailer is continuing to rationalise its physical footprint while investing in inventory efficiency, technology and supply chain agility, a strategy now being mirrored across the global fashion industry.

Smaller network, better returns

H&M ended the first half of fiscal 2026 with 4,038 stores worldwide, which is a net reduction of 128 outlets over the past year and over 600 fewer stores since 2022. The company plans to open around 90 stores during the full year while closing approximately 170, resulting in a net reduction of 80 locations. The retailer has also completed the closure of standalone Monki stores, integrating the youth fashion brand into Weekday to simplify operations and reduce duplication. While the restructuring contributed to a modest decline in sales, it strengthened profit.

Table:  H&M Group financial performance (H1 2026)

Despite a 1 per cent decline in net sales in local currencies, operating profit excluding one-time restructuring costs rose 14 per cent to SEK 8.1 billion, while gross margin improved to 53.8 per cent, highlighting the financial benefits of a leaner operating model.

H&M's strategy reflects a broader change across global fashion retail rather than an isolated restructuring exercise. Several established apparel retailers, including Gap Inc., have spent recent years reducing underperforming stores, while Inditex, the owner of Zara, has steadily consolidated its retail network by investing in larger, experience-led flagship stores instead of maintaining widespread smaller outlets. The economics of physical retail have changed significantly. Higher commercial rents, wage inflation, long-term lease obligations and increasingly stringent sustainability regulations particularly in Europe have raised the cost of operating extensive store portfolios.

At the same time, consumer purchasing patterns continue to shift online, increasing competition from digital-first platforms such as Shein and Temu that operate with shorter product development cycles. For traditional retailers, maintaining large inventories across thousands of physical stores has become an increasingly expensive proposition.

Table: H&M regional store net changes (May 2025-May 2026)

H&M's regional footprint reflects these changing priorities. The sharpest drop occurred across Asia, Oceania and Africa, where the company reduced its network by 97 stores over the past year. Western Europe also recorded a net decline of 20 stores, while the Americas posted a modest increase of eight outlets, indicating continued selective expansion in growth markets.

Inventory becomes the competitive edge

Beyond store closures, inventory management has emerged as one of the industry's most important profit drivers. For long fast-fashion retailers have relied on large seasonal inventory commitments that frequently resulted in aggressive markdowns when demand weakened. Today's focus has shifted towards faster stock rotation and more disciplined purchasing.

H&M reduced inventory by 10 per cent year-on-year to SEK 34.9 billion, equivalent to just 15.8 per cent of rolling 12-month sales. Lower inventory levels helped reduce promotional activity and supported higher full-price sales, contributing directly to improved margins. However, lean inventories also increase operational complexity. Smaller stock buffers require far more accurate forecasting to avoid missed sales opportunities.

Chief Executive Officer Daniel Ervér acknowledged that tighter inventory controls had occasionally limited the company's ability to fully meet customer demand. To improve responsiveness, H&M is flattening management structures, investing in RFID-based inventory tracking and bringing merchandise decisions closer to regional markets. The retailer absorbed restructuring costs of SEK 679 million as part of this organisational overhaul.

Supply chains move closer to consumers

Store optimisation is also reshaping sourcing strategies. As retailers operate with lower inventory levels, long production lead times have become a competitive disadvantage. Many global apparel companies are therefore shifting portions of manufacturing closer to major consumer markets through regional sourcing and nearshoring models.

Shorter supply chains allow retailers to replenish popular products more quickly, reduce excess inventory and respond faster to changing consumer preferences. Analysts believe this strategy is improving long-term financial resilience even if traditional retailers still trail digital-native competitors on speed.

As Yanmei Tang, Analyst at Third Principles Advisory opines, H&M may not lead the market in speed-to-market, but it has significantly strengthened profitability, inventory discipline and supply chain resilience compared with previous years. The company's future investments reflect this strategy. Rather than allocating significant capital to expanding store numbers, H&M plans selective growth in markets such as Paraguay and Argentina while upgrading flagship stores in major cities including Stockholm and Rio de Janeiro.

For global apparel retailers, the measure of success is shifting away from the number of stores they operate. Instead, sustainable growth is being defined by lean inventories, resilient supply chains, stronger margins and the ability to respond rapidly to changing consumer demand. H&M's latest restructuring suggests that in today's fashion retail landscape, fewer stores may ultimately deliver stronger financial performance.

Vietnam replacing Bangladesh as the world's second-largest ready-made garment (RMG) exporter is more than a change in rankings. It marks a modification in how global fashion companies evaluate manufacturing partners. Labour cost, long considered the defining advantage in apparel sourcing is steadily giving way to speed, supply chain resilience, trade access and raw material integration.

Latest WTO merchandise trade data reveals, China continues to dominate global apparel exports with more than 31 per cent market share. But the contest for the second position has grown, with Vietnam edging ahead of Bangladesh as international brands rebalance sourcing strategies amid volatile demand, rising logistics costs and tighter sustainability requirements.

Table: Global apparel export market share

Source: WTO Trade Statistical Review

A changing hierarchy

The shift reflects years of investment rather than a sudden competitive gain. Vietnam has systematically strengthened its textile sector through foreign direct investment from China, South Korea and Taiwan. These investments have pushed up domestic production of synthetic fibres, weaving, dyeing and finishing, reducing dependence on imported inputs and shortening manufacturing cycles.

Equally important is Vietnam's extensive trade pattern. Agreements such as the EU-Vietnam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) give preferential market access across major consumer economies. Lower duties and smoother customs procedures have made Vietnam increasingly attractive for multinational apparel brands.

Bangladesh, meanwhile, remains one of the world's most efficient producers of basic cotton garments, particularly knitwear and denim. Its manufacturing base is supported by more than 200 LEED-certified green factories. However, structural weaknesses have become increasingly visible. They import nearly 70 per cent of its synthetic fibre requirements, while energy shortages, congestion at Chittagong Port and extended production schedules continue to weigh on competitiveness. Manufacturing-to-shipment lead times typically range between 60 and 90 days, almost double Vietnam's 30 to 45 days. For retailers operating in fast-changing consumer markets, those additional weeks often translate into excess inventory and markdowns.

The speed advantage

The apparel industry is no longer led solely by production costs. It is increasingly governed by inventory productivity. Global retailers such as Inditex, H&M, Nike, Adidas, Lululemon and Fast Retailing are moving towards diversified sourcing models that assign products as per manufacturing strengths rather than concentrating production in one country.

Basic cotton essentials continue to be sourced from Bangladesh, while technical apparel, performance wear and synthetic garments are being produced in Vietnam. Ultra-fast fashion items are often nearshored to markets such as Turkey or Mexico to reduce replenishment cycles. This multi-country strategy reduces risk while improving speed-to-market, a critical component in fashion retail.

Why fibres matter

The rise of athleisure, sportswear and performance apparel has altered the industry's raw material requirements. Studies by RAPID and the Centre for Policy Dialogue indicate that man-made fibres now account for almost half of global apparel trade value, while cotton is roughly 42 per cent. Vietnam aligned its manufacturing with this transition years ago. Around 57 per cent of its garment exports are based on synthetic fibres and blended fabrics, making it well positioned to serve growing demand for activewear, outerwear and technical clothing.

Bangladesh, in comparison, continues to derive roughly 72 per cent of its exports from cotton-based products. While this remains a strength in basics it limits participation in faster-growing apparel categories. Industry estimates suggest that growing Bangladesh's share of the global man-made fibre apparel market could significantly increase export earnings by 2030, although doing so would require substantial investment in spinning, weaving, chemical processing and textile infrastructure.

Table: Vietnam vs Bangladesh, the competitive divide

Source: WTO, BGMEA, VITAS, McKinsey, GSO Vietnam, EPB Bangladesh

New sourcing playbook

A frequently cited retail supply-chain case shows this change. A global fashion retailer that previously sourced nearly three-fourths of its production from Bangladesh diversified its manufacturing network by shifting synthetic apparel to Vietnam while retaining Bangladesh for high-volume cotton basics. The result: a significant reduction in lead times, stronger full-price sales and improved inventory efficiency despite somewhat higher manufacturing costs. The lesson is clear, retailers increasingly optimise sourcing around product category, responsiveness and logistics rather than simply labour arbitrage.

Bangladesh's next chapter

Vietnam's rise should not be interpreted as Bangladesh's decline. Instead, it highlights the next phase of competition in global apparel manufacturing. Bangladesh retains formidable advantages in scale, manufacturing expertise and sustainability credentials. But sustaining long-term growth will require increasing investment in man-made fibre capacity, improving logistics infrastructure, ensuring reliable energy supplies, expanding automation and preparing trade arrangements for its post-Least Developed Country transition.

The global apparel industry is entering an era where flexibility outweighs scale and speed commands a premium. Vietnam's ascent shows that competitiveness today depends less on producing garments cheaply than on delivering them quickly, efficiently and in line with the changing demands of international fashion retailers.

In H1, FY26, UK-based component supplier Coats Group plc registered a 1 per cent organic growth to $837 million in revenue, despite a mid-single-digit contraction in global apparel and footwear markets. Amid retail inventory destocking and cautious order volumes, Coats sustained a 19.8 per cent adjusted EBIT margin, generating $166 million in operating profit. The apparel division reached $486 million, anchored by market share gains in China and strong demand for 100% recycled threads, which yielded $297 million in sales. David Paja, Group CEO, notes, the company was pleased with their H1 outperformance relative to the market and confident in our second half outlook.

M&A integration and digital platforms offset headwinds

Strategic acquisitions and software investments provided critical commercial resilience. Through its digital supply chain platform, Coats Digital, and the integration of insoles maker OrthoLite, the company expanded into premium adjacencies. While footwear organic sales remained flat before accelerating 6per cent in Q2,FY26 the OrthoLite integration remains on track to deliver $5 million in cost synergies during 2026 and over $40 million in annual sales synergies by 2030. Management reaffirmed its full-year guidance, supported by planned second-half cost savings of $15 million.

 Eyeing revenue growth with sustainable operations

Tracing its heritage back over two centuries, Coats Group plc manufactures industrial threads, structural footwear components, and engineered performance yarns. Operating globally across apparel, sports, and automotive sectors, the FTSE 250 enterprise targets medium-term organic revenue growth exceeding 5 per cent and operating margins of 21–23 per cent.