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Bangladesh Textile Shutdown Threatens RMG Exports, Jobs Ahead of Election

The Bangladesh Textile Mills Association has announced an indefinite shutdown of mills from February 1, raising major concerns for the country's Readymade Garment exports which account for 85% of total export earnings. The crisis, driven by a dispute over duty-free yarn imports and government-imposed duties, threatens the livelihoods of over 10 lakh workers and could trigger labour unrest. Commerce Secretary Mahbubur Rahman acknowledged the seriousness of the crisis, stating the government is exploring alternatives. The shutdown comes at a sensitive time, less than two weeks before the national election, with industry leaders warning it could collapse the $23 billion textile sector and force garment makers to import costlier yarn, eroding competitiveness.

Key Points: Bangladesh Textile Mill Shutdown Alarms RMG Export Sector

  • Indefinite mill shutdown from Feb 1
  • Threat to 85% of export earnings
  • Over 10 lakh workers face uncertainty
  • Dispute over duty-free yarn imports
  • Could spike bank non-performing loans
2 min read

Textile mill shutdown raises alarm over RMG exports in Bangladesh, threatens livelihoods

Indefinite textile mill shutdown in Bangladesh threatens $23B industry, 10 lakh jobs, and RMG exports ahead of national elections, sparking crisis.

"This is a crisis, a national crisis. - Showkat Aziz Russell"

New Delhi, Jan 24

The Bangladesh Textile Mills Association announcing an indefinite shutdown of mills, along with dispute over duty-free yarn imports between textile millers and garment exporters, has raised alarm over Readymade garments exports in the neighbouring country ahead of the national election scheduled for February 12, according to a report.

RMG exports account for about 85 per cent of Bangladesh's total export earnings. More than 10 lakh workers employed in the sector could face uncertainty over wages and benefits, potentially triggering labour unrest.

According to reports, the move by the Bangladesh Ministry of Commerce to impose duties on the import of cotton yarn from India and other countries has once again created instability in the country's RMG sector.

Economists warn that large-scale closures in the textile sector could add further strain to an economy already grappling with multiple challenges.

Commerce Secretary Mahbubur Rahman told Dhaka-based The Business Standard that the government recognises the seriousness of the crisis and is exploring possible options. "The textile industry is facing problems, no doubt. Something has to be done. We are thinking about what alternatives are possible," he was quoted as saying.

Textile mill owners have threatened to shut down factories from February 1, citing what they describe as prolonged government inaction in protecting the $23 billion textile industry.

The announcement comes at a sensitive time, less than two weeks before the national election scheduled for 12 February.

BTMA President Showkat Aziz Russell said "This is not a threat. The sector will shut down anyway. This is a crisis, a national crisis." He criticised policymaking, saying, "In any situation, India can make a decision within a few hours, whereas our government cannot do so even in months."

Russell was further quoted as saying that under the open costing method, any increase in production costs is ultimately passed on to buyers.

"However, if domestic textile mills collapse, garment manufacturers will be forced to import yarn from India at higher prices in the long run, eroding competitiveness," he added.

"A halt in yarn production would disrupt the garments supply chain, while difficulties in repaying bank loans could push non-performing loans (NPLs even higher at a time when banks are already under pressure, with NPLs estimated at around 35 per cent," said the report.

- IANS

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Reader Comments

P
Priyanka N
The BTMA president's comment about India making quick decisions is interesting. While our policy processes can be slow too, it highlights how crucial stable trade policy is for manufacturing. This duty dispute hurts everyone - Bangladeshi mills, garment makers, and ultimately Indian yarn exporters too.
A
Aman W
From an Indian perspective, this is a complex situation. On one hand, our yarn exports get affected by their duties. On the other, a collapse of their textile sector might force them to buy from us at higher prices later, but that's no good if their entire garment industry becomes uncompetitive. Hope they resolve it.
S
Sarah B
The timing before elections is clearly political pressure. But using a vital industry and workers' jobs as a bargaining chip is risky. Hope the authorities prioritize the economy over politics.
V
Vikram M
This shows how interconnected our regional economies are. A shock in Bangladesh's RMG sector can have ripple effects on Indian cotton farmers and yarn producers. SAARC nations need better crisis coordination mechanisms, honestly.
K
Kriti O
While I sympathize with the workers, I have to respectfully disagree with the mill owners' drastic action. Shutting down indefinitely hurts the very people they claim to protect. Negotiation, not shutdowns, is the way forward. The government's "exploring options" line sounds weak though.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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