Bangladesh is the world’s second largest clothing exporter. In its 2024/25 financial year, which ended on June 30, 2025, clothing exports from the country reached US$39.35 billion. Furthermore, the industry has set an ambitious export target of US$100 billion for 2029/30. However, the country’s clothing industry has a number of hurdles to overcome if it is to reach this target, according to a 51-page report called “Prospects for the textile and clothing industry in Bangladesh, 2025”, from the global business information company Textiles Intelligence.
Many believe this target to be unrealistic, especially when given that exports rose by an average of only 2.4% a year between 2018/19 and 2024/25.
Admittedly, this slow growth reflected macroeconomic factors outside the country’s control, which occurred largely as a result of the COVID-19 pandemic and the war in Ukraine. However, growth was also negatively affected by a number of domestic issues, including a faltering economy, a depreciating currency, high inflation, political turmoil following the collapse of the government in August 2024, and poor infrastructure—including inefficient transportation routes and port services.
Furthermore, the country’s textile industry does not meet the demands of the clothing industry. There is a heavy reliance on imported cotton and imported fabric. This comes at huge cost to the industry in terms of price and longer lead times. In addition, the depreciation of the taka has made imports more expensive and this has put added pressure on manufacturers’ already tight margins.
At the same time, the clothing industry is overdependent on a limited number of export markets, notably the EU and the USA, and so it is heavily susceptible to the introduction of trade restrictions in these markets. In the USA, for instance, a so-called “reciprocal” tariff of 20% has been imposed on clothing imports from Bangladesh by President Trump.
Moreover, Bangladesh is set to graduate from its current status as a least developed country (LDC) to middle income status in November 2026. As a result, clothing imports from Bangladesh into a number of major markets—and particularly the EU—will become subject to additional tariffs, and this could have a negative impact on Bangladeshi clothing exports.
Admittedly, Bangladeshi clothing exports will most likely become eligible to enter these markets at preferential rates under other arrangements. But, in order to do so, they may have to comply with stricter rules of origin.
Having said all that, there are a number of things for the Bangladeshi clothing industry to feel positive about. The government is keen to encourage the development of the textile and clothing industry—given that the latter accounts for well over 80% of the country’s total exports—and, to this end, it offers one of the most liberal regimes for foreign investors in Asia. In addition, the country has a number of export processing zones and is in the process of building several economic zones—where it provides additional benefits.
At the same time, the clothing industry has strong investor support from a number of major clothing brands, including Gap, H&M, Levi’s and Zara, as demonstrated by the work which has been carried out to improve the safety of buildings in the country. Also, there has been much investment in recent years in the setting up of modern “green” manufacturing facilities—so much so that Bangladesh boasts the highest number of Leadership in Energy and Environmental Design (LEED) certified factories in the world.
Also, there are opportunities for significant expansion of the Bangladeshi clothing industry, not least in diversifying into exports of higher value products and into the largely untapped man-made fibre clothing market. At present, Bangladeshi clothing manufacturers focus primarily on the production of cotton clothing items. However, cotton clothing accounts for only around 25% of the global clothing market whereas man-made fibre clothing accounts for a share of around 70%.
