Bangladesh’s Textile Backbone on the Brink as Policy Shifts Open the Door to Indian Yarn

Bangladesh, long seen by the world as a global hub for ready-made garments, is now staring at a near shutdown of its textile and spinning industry. The crisis has deepened to the point where the Bangladesh Textile Mills Association has announced that almost all spinning mills across the country will be closed indefinitely from February 1. Most strikingly, India’s industrial strength and strategic advantage have emerged as a key factor behind this collapse.

To understand the gravity of the situation, it is important to look at how Bangladesh’s garment industry functions. It operates in three stages: cotton, yarn, and fabric. Spinning mills form the critical link in this chain, converting raw cotton into yarn, which is then used to produce shirts, T-shirts, trousers, jackets, and other garments.

Put simply, when spinning mills come to a halt, the entire garment industry begins to wobble. Bangladesh has now reached exactly that point. The obvious question is: how did such a massive industry fall into crisis so suddenly?

The answer lies in policy decisions taken by the Bangladeshi government—policies that until a few months ago were being hailed as part of Muhammad Yunus’s “master strategy.” Today, however, the same measures have turned into a major headache for the industry.

A few months ago, the government allowed companies exporting ready-made garments to import yarn duty-free. In practical terms, this meant that exporters could bring in yarn from abroad without paying any tax. On the surface, the move appeared to be a smart way to boost exports. In reality, it completely altered the market dynamics.

This is where India entered the picture. India is one of the world’s largest producers of cotton yarn. Indian yarn is known for its superior quality, lower cost, and reliable supply. Once duty-free imports were permitted, large volumes of Indian yarn began flowing into Bangladesh.

Garment factories did not hesitate. They quickly moved away from locally produced Bangladeshi yarn and shifted to Indian yarn, which offered better quality at a cheaper price. The impact on domestic spinning mills was immediate and severe.

In an attempt to protect local producers, restrictions were imposed on Indian yarn entering through land ports. However, no such limits were placed on imports via sea routes. Indian exporters simply changed their logistics, and even larger quantities of yarn began arriving through maritime channels.

As a result, Indian yarn strengthened its grip on the Bangladeshi market, while local spinning mills were pushed to the edge. Today, Bangladesh’s spinning industry is openly admitting that it has become financially non-viable—bringing the country’s once-mighty textile ecosystem to the brink of collapse.