A recent recommendation by the Ministry of Commerce to withdraw bonded warehouse facilities for 10–30 count cotton yarn has triggered significant instability across Bangladesh’s textile and apparel sectors. This move, which effectively imposes an estimated 40 per cent cumulative duty on imports, has been met with sharp resistance from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the BKMEA. Industry leaders describe the policy as a ‘unilateral decision’ that prioritizes upstream spinning mill interests over the downstream garment sector, which accounts for over 80 per cent of national export earnings. The dispute comes as apparel exports already contracted by 2.63 per cent during the July–December 2025 period, with a staggering 14.23 per cent plunge recorded in December alone.

Operational disruption and cost escalation

The fiscal impact of this policy shift is substantial. Currently, Bangladeshi spinning mills sell 30-card yarn at approximately $3.00 per kg, while Indian manufacturers supply equivalent quality for $2.60 - a 40-cent differential that exporters claim is critical for global price parity. The withdrawal of bonded facilities at this juncture could be a death warrant for the knitwear sector, states Mohammad Hatem, President, BKMEA. Conversely, the Bangladesh Textile Mills Association (BTMA) has threatened an indefinite shutdown of all textile mills starting February 1, 2026, if the protections are not enforced, citing unsold inventory worth Tk 120 billion and the ‘dumping’ of cheap foreign yarn.

Strategic risks and market outlook

Beyond immediate production costs, economists at the CPD warn of broader geopolitical repercussions. Restrictions on land-port imports from India have already contributed to a 6.5 per cent decline in Bangladesh’s regional exports. As Vietnam secures zero-duty access to key markets via new Free Trade Agreements, the additional 33 per cent to 40 per cent tax burden on raw materials could drive international buyers toward more stable competitors. The government now faces the challenge of balancing long-term industrial security for domestic spinners with the immediate survival of the nation’s premier export engine.

The RMG sector is Bangladesh’s economic backbone, employing 4 million workers and targeting $44.49 billion in exports for FY26. While domestic spinning meets 90 per cent of knitwear yarn demand, the industry relies on imports for high-count woven fabrics. Current growth is challenged by 14 per cent export dips and rising energy costs, necessitating a shift toward high-value technical textiles.