- Mounting losses push spinning mills toward shutdowns
- Crisis may redirect yarn trade flows toward India
The textile manufacturing sector in Bangladesh is facing a severe financial crisis, with spinning, weaving, and processing mills reporting deepening losses and accelerating closures. The Bangladesh Textile Mills Association (BTMA) has warned that conditions have deteriorated sharply over the past three months, forcing at least 58 mills to partially or fully shut operations. Weak yarn demand, cash flow stress, and rising inventories have pushed several units to the brink, threatening the stability of Bangladesh’s backward textile value chain.
The stress is largely driven by cheap yarn imports, high operating costs, and fading policy support. Domestic spinning mills are unable to compete with lower-priced imported yarn, particularly from India, while energy, finance, and compliance costs remain elevated. Earlier government incentives have been scaled back, reducing price support for local yarn. At the same time, duty-free and informal imports of yarn and fabric have intensified price pressure, forcing mills to sell below cost and increasing bank defaults.
In response, BTMA has sought urgent government intervention, proposing a five-year 10% incentive on domestic yarn sales, sharply higher than the current 1.5%. The association has also demanded that 50% of yarn used in export-oriented garment production be sourced domestically, along with a temporary safeguard duty on cotton yarn imports. BTMA argues these measures are critical to prevent further closures, protect employment, and stabilise domestic capacity.
The implications for India are significant. As Bangladeshi spinning mills shut or cut output, Indian yarn exports to Bangladesh could rise further, supporting Indian spinning millers in the near term. However, sustained dependence on imported yarn may weaken Bangladesh’s domestic consumption of raw cotton, indirectly pressuring regional cotton demand. For Indian ginners, this could limit incremental export demand for cotton, while brokers may see increased yarn trade volumes but higher policy risk if Bangladesh imposes safeguard duties. Over the medium term, any protectionist response from Bangladesh could disrupt current yarn trade flows and reintroduce volatility in South Asian textile markets.
Outlook
Looking ahead, without swift policy relief, Bangladesh’s textile sector risks prolonged contraction, greater import reliance, and job losses. For spinning millers and brokers across the region, the situation signals near-term export opportunities but rising regulatory and demand uncertainty, making trade positioning increasingly sensitive to policy decisions in Dhaka.
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