Well, the challenge is immense! After all Bangladesh is the world’s second-largest cotton importer after China. Between July and October (FY ’24-25), yarn imports increased by 25.8 per cent and fabric imports by 26.9 per cent. According to reports, Bangladesh’s import of RMG raw materials such as raw cotton, yarn fabric and dyeing materials was US $ 7.92 billion in the first half of FY ’24. Moreover, Bangladesh imports around US $ 10 billion worth of fabrics from China each year.
Despite this, Bangladeshi textile mills are striving for self-reliance, with significant investments in raw materials and vertically integrated set-ups. In recent times, they have tasted some success. For instance,
the industry now fulfils nearly 85 per cent of the total requirement of the country’s knitted fabrics. There are more than 100 yarn and 200 fabric-producing mills in Bangladesh that have a reasonable scale of production and state-of-the-art infrastructure. Overall the country has annual yarn spinning capacity close to 4.5 billion kg and 9 billion metres of fabric.
Several companies are taking proactive steps to expand their raw material base. For example, Envoy Textiles, claiming to be the world’s first LEED certified platinum denim manufacturing facility, will invest around US $ 8.11 million (Taka 97 crore) in a new spinning plant to boost blended yarn production capacity. The plant is expected to increase the company’s manufacturing capacity by 4,550 tonnes per year. To be completed by December 2025, the facility will focus on cotton-polyester-spandex core-spun yarn as the demand in this segment is growing.
Last year, DBL Group, a diversified conglomerate with interest in apparel, textiles, textile printing, washing, garment accessories, packaging, ceramic tiles, pharmaceuticals, dredging amongst others, opened a new spinning mill. This mill has an annual production capacity of 15,000 tonnes of yarn.
The project cost around US $ 80 million, with US $ 52 million coming from a loan provided by British International Investment (BII), the UK government’s finance institution. The mill, having LEED-certified green building, produces cotton and MMF yarn, for in-house consumption of the group that already has three spinning mills.
Similarly, Saiham Group, a fully integrated textile company that handles everything from spinning to garment production, already has about 60,000 spindles installed. Its new facility, Saiham Denims Ltd., is planning to add another 70,000 spindles to produce Carded Compact Cotton yarn.
Additionally, Noize Jeans, a Hong Kong-based sourcing company with two RMG factories in Bangladesh, is planning to start a fabric facility and the thrust will be to create sustainable products with new, alternate fibres, as the company is exploring innovations with banana and pineapple fibres.
Challenges On The Path To Self-Reliance
There are many challenges on the path to self-reliance. Currently, the focus of fabric production remains mainly on basic knitted fabrics like single jersey and interlock. With the increase in local production, the key challenge is price, as local yarn production is not competitive in terms of cost.
“The cost of local fabrics can sometimes exceed that of imported counterparts, especially for basic commodities. However, the quality of locally produced fabrics is steadily improving. While some imported fabrics offer unique finishes and textures, local mills are making significant strides in producing high-quality fabrics that meet international standards,” said Engr. Nazmul Islam, Founder and CEO, Fabric Lagbe Ltd., a marketplace start-up known for fabric, which sources approximately 60 per cent of its fabrics locally and
40 per cent from imports.

Though the company prioritises local sourcing, certain specialised fabrics still require international procurement. Recent global supply chain disruptions and rising import costs have shifted the company’s focus towards local sourcing, however, ensuring consistent quality remains paramount.
“We believe that continued investment in local production will lead to further improvements in both pricing and quality,” added Engr. Nazmul Islam.
Whereas, Dipankor Chakraborty, CEO, Ahona Textile Mills, mentioned, “Without a steady supply of yarn, fabric production is simply not feasible. To ensure smooth business operations, we urgently need improved access to cotton.” He also underlined that cotton production needs to be incentivised.
Many RMG exporters are witnessing a growing demand for synthetic fabrics, particularly in sportswear and outerwear. To meet this demand while ensuring quality, they collaborate with reputable suppliers who hold relevant quality and sustainability certifications.
Bangladesh’s synthetic yarn import valued at US $ 1.52 billion in the July-December period of FY ’24 which is almost 98 per cent of the country’s MMF demand. Experts say, if Bangladesh is able to have a strong MMF base within the country, it can even cross the RMG target of more than US $ 100 billion.
“As the demand is also increasing for high-end fabric, MMF, now the focus is to produce the same locally as it is being majorly imported. Local production may take time but will happen for sure. The companies are also focusing on the production of polyester and rayon-based fabrics,” stated Mohammad Hatem, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), a trade body representing around 2520 knitwear member factories.

More thrust is required to produce performance-based fabric that can be used in sportswear as this is a growing segment. The Government is also supporting synthetic fabric as recently Bangladesh Bank announced 3 per cent cash assistance incentives for exporters of synthetic-fabric shoes and bags. “We shall see a surge in demand for synthetic fabric following the government’s cash incentives for synthetic shoes and bags which presents a golden opportunity for Bangladesh. To fully capitalise on this, we must focus on establishing and expanding our domestic synthetic fabric production capacity,” said Rasha Khan, Founder, Escape Bags, a leading bag manufacturer in Bangladesh. “To fully capitalise on this, we must strengthen and expand our domestic synthetic fabric production capacity.”
Changing fashionMarket trends are more about high fashion and there is growing demand for very lightweight fabric having the feel and look of sportswear. There is also more thrust on polyester-based fabrics. Different raw materials are the focus of companies as they are exploring open-end yarn, ring yarn, blend of Tencel, Lyocell, etc. The blend of Nylon and Tencel is also growing as it gives a softer and unique-hand feel. The focus is on newer textures, finishes and functional fabrics. |
Other stakeholders are also seeking more government support, as woven fabric production requires heavy investment that many companies cannot afford, especially new ventures. Currently, Bangladesh’s local production only meets around 40 per cent of the demand for woven fabrics.
For instance, the Bangladesh Textile Mills Association (BTMA), a trade body representing 1,849 yarn and fabric manufacturers, is in touch with the authorities for wage subsidies and capital machinery incentives.
Experts say the interest rate is around 16 per cent which is not viable at all. To promote investment in the woven fabric segment, the Government should provide capital on a lower interest rate.
Local spinning mills are also lobbying to make it a mandatory condition to procure 70 per cent of their total cotton yarn from local sources. Though a balanced approach is crucial especially as there are limitations and challenges involved in local production.
Banks Face Liquidity Crisis
Another issue is the severe liquidity crisis with outstanding bills totalling US $ 270 million remaining unpaid across various banks. Recently BTM called on the Bangladesh Bank for assistance in recovering overdue payments from commercial banks related to back-to-back LCs for yarn and fabric supplied to the RMG sector.
The demand for funds pushed the interest rate in the inter-bank money market to a record high of 13.50 per cent for 90-day term loans on November ’23, showing a worsening financial crisis.
Similarly, the average overnight interest rate in the call money market rose to 10.04 per cent in November,
up from 8.19 per cent in the same month last year.
The process of opening LCs has also become more complicated. Due to the dollar shortage, importing yarn has become difficult, particularly for companies or mills without direct export business.
Raw material volatility, rising costs and importantly severe gas crisis have impacted yarn production capacity for many players, especially those who have limited resources. These mills are forced to either import or subcontract their production. The country requires around 4,000 million cubic feet per day (mmcfd) of gas, including imports, but the current supply falls short, leaving a deficit of over 1,000 mmcfd.
“Due to the gas crisis, our monthly yarn production capacity ranges from 400 to 700 tonnes while we receive orders totalling 900 tonnes each month, of which we manage to fulfil around 200 tonnes through sub-contracting and external sources,” said Abul Hasnat, MD, Hasnat Textile Ltd. (HTL), a key player in polyester yarn and knitted fabric.
The spinning sector also faces a shortage of mid-level technical experts as well as lack of sufficient skilled operators who can easily manage electronics-controlled machinery.
For nine months of FY ’24, yarn import of Bangladesh was around US $ 2.32 billion, witnessing an overall increase of 10 per cent on a Y-O-Y basis. |
Talking about the labour unrest, Md. Khairul Islam, Owner, M K Fabrics Fashion, offering a large range of fabrics, stated, “Labour unrest has increased the challenges. Also, many Bangladeshi companies must invest in state-of-the-art infrastructure to improve their quality and cost-competitiveness especially as Indian companies have good infrastructure.”
Some in the industry also highlight quality concerns, such as inconsistent locally produced fabrics. The lack of diverse and specialised yarns and fabrics limits design options. Due to this, most of the mills are not able to achieve desired production levels and quality standards.