Bangladesh faces decline in home textile exports, losing ground to Pakistan

The loss of job orders that have moved to Pakistan over the last two years is mostly to blame for the severe decline in Bangladesh’s domestic textile export industry. A sharp spike in petrol prices, political turbulence, and heightened labour unrest in Bangladesh’s industrial areas have all contributed to this trend.

In February 2023, the price of petrol in Bangladesh increased from Taka 11.98 per unit to Taka 30 per unit, a startling 150.41 percent increase. Many local home textile exporters were compelled to stop booking new work orders because to the steep increase in production costs, which made it financially unfeasible. Industry insiders claim that businesses that formerly paid monthly petrol expenses of about Taka 68 crore now have to pay more than Taka 126 crore, leading to substantial financial losses.

Little Group chairman Khorshed Alam emphasised the consequences of this price rise, pointing out that work orders were already predicated on outdated pricing models before the increase took place. Despite this, industry executives remain cautiously optimistic, pointing out that exports of domestic textiles are gradually rebounding.

In sharp contrast, Pakistan, the seventh-largest producer of cotton in the world, is seeing a boom in its textile industry thanks to supportive government policies and a notable increase in cotton production. As a result, Pakistan’s textile exports increased 13 percent year over year to US $ 1.64 billion in August. Knitwear and bedwear exports increased by 15 per cent, while ready-made clothing exports increased by 28 per cent.

Pakistan also enjoys zero-rated tariffs on about two-thirds of tariff lines under the Generalised Scheme of Preferences Plus (GSP+) of the European Union. Compared to nations like Bangladesh, who only receive regular GSP benefits, Pakistani exports are therefore more competitive. Pakistan’s exports to the EU increased by a remarkable 108 per cent between 2014 and 2022.

In contrast, Bangladesh’s domestic textile exports for the fiscal year 2023–2024 decreased 2.05 per cent to US $ 851.01 million, a substantial drop from the US $ 1 billion mark reached in the fiscal year 2021. The gas crisis and continued political unrest, which have harmed production capacity and competitiveness, are blamed by industry experts for this decline.

Only five to seven significant textile manufacturers are still operating in the export market as a result of low gas pressure and persistent labour problems, according to former CEO of the Bangladesh Textile Mills Association Monsoor Ahmed.

In order to restore its competitive advantage in the international market, Bangladesh’s textile sector urgently needs strategic changes and assistance as it continues to navigate these difficulties.