Overview of the Sector

The Ready-Made Garments (RMG) sector continues to serve as the backbone of Bangladesh’s export-oriented industrialization, maintaining its dominance in the country’s economic structure. As of 2025, the sector recorded USD 39.34 billion in export earnings, with knitwear accounting for USD 21.16 billion and woven garments for USD 18.19 billion. Early 2025 data indicate a recovery in Foreign Direct Investment (FDI), particularly in high-tech textile segments and export processing zones. The industry is backed by the highest number of green garment factories globally, with over 230 LEED-certified units, supported by government initiatives promoting sustainable manufacturing and environmental compliance.^1, 2 

The sector remains heavily concentrated in key markets, with the United States and European Union dominating exports. During October-December of FY24, the top nine export destinations accounted for 67.56% of total RMG exports, highlighting continued market concentration risks.³ Knitwear continues to lead the export basket, contributing to a larger share than woven garments, indicating relatively stronger domestic backward linkages.  

Despite its scale, the industry remains dependent on imported raw materials. In Q2 FY2024, imports of raw materials, including cotton, yarn, and fabrics, stood at USD 3.37 billion, accounting for 28.65% of total RMG export value, reflecting limited backward integration, particularly in woven and synthetic segments. 

The sector also faces increasing structural and external challenges. These include rising production costs due to energy price volatility, exchange rate depreciation, and global inflationary pressures, alongside declining demand in major markets. Additionally, Bangladesh’s upcoming LDC graduation in 2026 is expected to impact competitiveness through the gradual loss of trade preferences, requiring significant improvements in productivity and compliance standards. 

At the same time, the industry is undergoing a transition toward higher value addition and sustainability. There is growing emphasis on green manufacturing, compliance with international standards, and diversification into man-made fibre (MMF) products, which dominate global textile demand. Overall, as of 2024–2025, Bangladesh’s RMG and textile sector remains a resilient, export-driven industry, balancing strong global positioning with the need for diversification, technological upgrading, and policy adaptation to sustain long-term growth. 

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Key Factors Driving the RMG and Textiles Industry

Bangladesh’s RMG sector has grown due to several pivotal drivers. These factors encompass the country’s extensive history of textile production, a cost-effective labor force, export facilitation measures, and trade agreements such as the Generalized System of Preferences (GSP). 

1. Government Incentives Boosting Export Growth: Incentives include duty-free import of machinery and raw materials, bonded warehouse facilities, and cash incentives for specific garment categories. 

2. Cost-Effective Labor: The presence of a plentiful and affordable labor force has significantly reduced production costs in comparison to other developing nations. 

3. Special Economic and Export Processing Zones (EPZs): EPZs in Bangladesh play a substantial role in attracting both foreign and local investment, collectively contributing to increased export volumes and foreign exchange earnings. The majority of units in the country’s EPZs manufacture readymade garments. 

4. Trade Agreements: Bangladesh’s participation in trade agreements like the South Asian Free Trade Area (SAFTA) and the Asia-Pacific Trade Agreement (APTA) has facilitated regional trade. Bangladesh also benefits from duty-free access in 52 countries. 

5. International Support: Bangladesh’s status as a Least Developed Country (LDC) has rendered it eligible for specific trade benefits. Notably, the European Union’s Everything but Arms (EBA) initiative grants duty-free and quota-free access to exports from LDCs. Additionally, GSP programs offered by developed nations, including the EU and Canada, have provided Bangladesh with preferential market access, notably benefiting the apparel sector and driving export growth. 

6. Geographic and Demographic Advantages: Bangladesh’s strategic geographical location offers significant advantages for international business. The country enjoys convenient access to international seaports, air routes, and other critical infrastructure, enhancing its attractiveness for global commerce. 

7. Green and Sustainable Practices in RMG: Bangladesh’s RMG sector is increasingly embracing sustainability through a focus on circularity, decarbonization, and resource efficiency. Key initiatives include scaling textile waste recycling (jhut), adopting renewable energy solutions, improving water management through advanced treatment technologies, and aligning with global standards such as the EU Green Deal. 

Export Potential

Apparel continues to dominate Bangladesh’s export landscape, remaining the country’s largest export-earning sector and a key driver of foreign exchange earnings. Europe remains the largest export destination for Bangladesh’s RMG exports, followed by key markets such as the United States and the United Kingdom. 

Bangladesh’s RMG sector has continued to demonstrate resilience, recording a 6.34% growth in export earnings during the January–March period of FY2025–26, despite ongoing global and domestic challenges. At the same time, exports to the United States have shown strong growth, with RMG exports reaching USD 2.12 billion during July–September 2025, up from USD 1.87 billion in the same period of the previous year, indicating strengthening demand in key markets. 

To ensure sustained export growth, diversification of the product basket remains critical. Bangladesh’s current export portfolio is largely concentrated in basic apparel, while expanding into man-made fiber (MMF)-based apparel and higher-value products presents significant opportunities to capture evolving global demand. 

Moreover, the shift toward circular fashion and sustainability-driven production is becoming a key determinant of export competitiveness. Increasing regulatory requirements in major markets, particularly in Europe, related to traceability, recycling, and environmental compliance, are reshaping sourcing decisions and market access. At the same time, post-LDC graduation dynamics may introduce tariffs of up to 11.8% in the EU market if GSP+ conditions are not met, further emphasizing the need for compliance-driven competitiveness. 

Overall, Bangladesh’s RMG and textile sector holds strong export potential, supported by established global market linkages, rising demand in key markets, and emerging opportunities in sustainability-driven apparel. Future growth will depend on product diversification, technological upgrading, and alignment with evolving global trade and regulatory standards.

Market Dynamics

Manufacturers: The largest industry in the country is represented by the Ha-Meem Group, which operates 26 garment factories across Bangladesh. Another prominent garment manufacturing company is Beximco, which commenced operations in 1997. BAL is a 100% export-oriented clothing manufacturer specializing in the production of woven material clothing. DBL Group is a leading multi-faceted garment and textile manufacturing company with a workforce of approximately 35,000 employees. Other significant players include the Faki Group, Square Fashions LTD, and the Epyllion Group, among others. 

Buyers: Currently, there are more than 100 international brands that source apparel from Bangladesh. Some of the top clothing brands that engage in sourcing from Bangladesh include Marks & Spencer, Calvin Klein, Lee, H&M, Supreme, American Eagle, Zara, Gap, Tommy Hilfiger, and many others. 

Additionally, Bangladesh holds untapped potential in leveraging its approximately 440,000 tonnes of annual textile waste (jhut), which can be converted into recycled raw materials for higher-value apparel production. Strengthening recycling and circular supply chains can reduce import dependency while expanding export opportunities in a sustainable fashion. 

Government Support & Policy Incentives

• Duty exemptions for importing capital machinery and raw materials for the textile sector.  
• Up to 0.3% to 3% cash incentives on textile exports, depending on the product type and market 
• Incentives for sustainable practices, including tax exemptions and duty-free imports for green factories; 10% corporate tax rate for export-oriented green industries (Applicable until 30 June 2028. 
• State-sponsored programs and grants for supporting investment in the training of the workforce, especially in advanced textile techniques 

Investment Challenges and Mitigation Strategies

The garment industry in Bangladesh faces a range of difficulties. These encompass the escalation of labor costs, heightened competition from other cost-effective nations, and the imperative to improve working conditions and environmental sustainability. Additionally, the sector is contending with the ramifications of technological progress and the automation revolution, which are fundamentally reshaping the worldwide garment industry. 

Future Trends and Opportunities

1. Strategic Transition to Man-Made Fibers (MMF): The industry is pivoting from cotton toward non-cotton and MMF products, with the target of reaching $94 billion in RMG exports by 2029.⁷ Moreover, current domestic demand for MMF is approximately 980 tons per day, while local production capacity is only 100 tons per day, creating a significant investment opportunity for backward-linkage industries.  

2. Value Chain Upgrading and Industrial Deepening: Bangladesh’s RMG sector is transitioning beyond the traditional Cut, Make, and Trim (CMT) model toward Original Design Manufacturing (ODM) and Original Brand Manufacturing (OBM) to capture higher value through R&D and branding.⁸ In parallel, the development of backward linkages, particularly in textile dyes and auxiliary chemicals, is expected to reduce lead times and support fast fashion demand. Domestic dye production alone is projected to grow at a CAGR of 8% through 2030, representing a $180 million import-substitution opportunity, further strengthening the industry’s value chain.⁹ 

3. Green Transformation and ESG Leadership: The industry is adopting solar-integrated factories and water-efficiency certifications to meet the stringent ESG standards required for the EU’s GSP+ eligibility.¹⁰ Furthermore, Bangladesh Bank has formed the Green Transformation Fund (GTF), which provides BDT 5,000 crore for refinancing green machinery imports.¹¹