Bangladesh’s textile sector is facing a major crisis as the Bangladesh Textile Mills Association (BTMA) has announced an indefinite shutdown of all textile mills across the country starting February 1. The association cited severe financial losses, inability to repay bank loans, and lack of government action to protect domestic yarn producers as the main reasons behind the decision. The announcement was made by BTMA President Showkat Aziz Russell during a press conference at the association’s office in Dhaka on January 22.

Russell made it clear that the decision was unavoidable and not a form of pressure on the government. He said, “We will shut down no matter what. We do not have the capacity to repay bank loans.” He further explained that the financial condition of the industry has worsened to such an extent that even selling assets would not help. “Even if we sell off all our assets, it will not be possible to clear the debts,” he stated.

According to BTMA, the capital base of the textile industry has declined by nearly 50 per cent, making continued operations impossible. The association also revealed that spinning mills have been operating at only around 50 per cent capacity over the past 30 days. During this period, the industry reportedly suffered losses of around Tk 12,000–15,000 crore. As a result, many mills have failed to repay bank loans, which, according to BTMA, could pose a serious risk to Bangladesh’s entire financial system.

Russell warned that if instability arises in the banking sector due to this crisis, the government should take responsibility. He accused the interim government of ignoring the issue and failing to take concrete steps. Expressing frustration, he said, “I have gone to all the ministries and relevant departments, but everyone is shifting responsibility to others. No concrete decision is coming.” He also criticised the government’s response to the industry’s problems, saying, “Although the textile sector contributes around 13 per cent to the country’s GDP, the interim government does not even spend 13 minutes listening to our problems.”

The crisis has intensified due to a conflict between textile millers and garment exporters over the import of cheap yarn. The issue revolves around the bonded warehouse facility, which allows duty-free import of yarn, especially in the 10–30 count range. BTMA claims that these imports have flooded the domestic market, harming local spinning mills and creating large stocks of unsold yarn worth billions. The association has repeatedly demanded the suspension of this facility, arguing that without government intervention, the primary textile sector faces an existential threat.

The situation escalated after the commerce ministry requested the National Board of Revenue to suspend duty-free yarn imports under the bonded warehouse system. While this move was intended to protect domestic spinning mills, garment exporters warned that it would significantly increase production costs for knitwear and garment manufacturers. This has led to a direct standoff between textile mill owners and exporters.

Russell said that BTMA leaders discussed the issue with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and claimed that BGMEA had recognised the risks of overdependence on imported yarn. He stated that continued reliance on low-cost imported yarn could lead to the collapse of the domestic textile industry.

BTMA also argued that local spinning mills are capable of meeting 50 to 70 per cent of the country’s yarn demand. According to the association, if domestic mills collapse due to cheap imports, garment manufacturers will become entirely dependent on foreign yarn.

However, BGMEA rejected BTMA’s claims and criticised Russell’s remarks on yarn imports and bonded facilities. In a statement, BGMEA said that his comments were inconsistent with statistical data and could negatively affect the garment industry’s cost structure. The association emphasised the need for fact-based policy discussions and clarified that its position is based on verified data rather than assumptions.

Garment exporters, represented by BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), strongly opposed the suspension of duty-free yarn imports. They warned that such a move could increase yarn prices by $0.30 to $0.60 per kilogram, which could reduce the competitiveness of Bangladesh’s $28 billion knitwear export sector.

Bangladesh’s textile industry, valued at around $23 billion, plays a crucial role in the national economy. It supplies yarn to the ready-made garments sector, which accounts for about 85 per cent of the country’s total export earnings. The shutdown threat comes at a sensitive time, just ahead of national elections, and could disrupt the entire supply chain. The situation may also create uncertainty over wage payments for workers and lead to wider economic consequences.

The potential closure of textile mills could affect millions of jobs. Recent data shows that between January 2024 and March 2025, 113 ready-made garment factories shut down, resulting in the loss of jobs for around 96,000 workers.

Government officials have acknowledged the seriousness of the crisis. Commerce Secretary Mahbubur Rahman said that the government is exploring multiple options to address the concerns of both textile mill owners and garment manufacturers. He indicated that efforts are underway to find a solution that balances the interests of all stakeholders involved.

As tensions continue between textile millers and garment exporters, the future of Bangladesh’s textile and garment industry remains uncertain. The planned shutdown of mills from February 1 could have far-reaching consequences for the country’s economy, financial system, and employment sector.