Spanish fashion group Inditex has warned that frequent policy changes in Bangladesh are raising apparel sourcing costs and delivery times, potentially prompting international buyers to shift orders to competing manufacturing hubs, including Vietnam, India, Pakistan and Cambodia.
The concerns were raised during a meeting between Inditex officials and Commerce Minister Khandaker Abdul Muktadir in Dhaka on Sunday, as Bangladesh’s garment industry faces growing pressure to maintain its price competitiveness and supply-chain reliability.
Inditex, the parent company of Zara, sources apparel worth around $2.5 billion annually from Bangladesh, placing it among the European Union’s largest buyers of the country’s garment products, according to The Financial Express. Company representatives reportedly highlighted difficulties associated with cotton yarn import procedures, restrictions on land-port imports and the cancellation of transshipment facilities for Bangladeshi exports.
The warning comes amid growing industry concerns that regulatory uncertainty is undermining manufacturers’ ability to plan production, secure raw materials and meet international delivery schedules.
A major concern centres on the withdrawal of bonded warehouse facilities for imports of cotton yarn measuring 10 to 30 counts, a category widely used in knitwear production.
Fakir Kamruzzaman Nahid, director of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and managing director of Fakir Fashion Ltd, said the price of locally sourced yarn had increased to around $3.70 per kilogram from an average of $3.15 following the policy change.
The increase is adding to manufacturers’ production costs and weakening their ability to compete with suppliers in other countries, he said.
The dispute has also affected the clearance of imported yarn. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and BKMEA have sought government intervention over consignments held at Chattogram port, warning that delays in obtaining raw materials could disrupt production and jeopardise export orders.
The government’s handling of the issue has added to uncertainty. Although the commerce ministry moved in September to withdraw the bank-guarantee requirement introduced for affected imports, exporters subsequently reported continuing clearance difficulties. A further dispute over bonded warehouse arrangements has kept the issue in focus.
The Bangladesh Textile Mills Association (BTMA), which represents domestic textile mills, has defended the tighter import arrangements, arguing that a bank-guarantee-based system can help prevent misuse of duty-free facilities, protect government revenue and ensure fair competition between imported and locally produced yarn.
The latest warning comes as international fashion retailers reassess their sourcing networks in response to production costs, energy constraints, geopolitical risks and changing trade conditions.
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Bangladesh’s exposure to these shifts is significant because the ready-made garment industry remains the country’s principal export-earning sector. Competition is no longer determined solely by labour costs and manufacturing capacity. Reliable access to raw materials, predictable regulations, logistics efficiency and on-time delivery are also critical to sourcing decisions.
Industry representatives said other major buyers, including H&M and C&A, had raised concerns over the recent policy changes. Bangladesh Employers Federation President Fazlee Shamim Ehsan also warned that uncertainty over future regulations, combined with existing energy challenges, could lead buyers to delay orders or transfer part of their sourcing elsewhere.
Such warnings do not necessarily mean that buyers will withdraw entirely from Bangladesh. International retailers typically distribute production across several countries to manage risk, control costs and maintain supply flexibility. However, even a partial shift in order volumes could affect factory utilisation, employment and export earnings if manufacturers cannot replace the business.
BGMEA and BKMEA have urged the government to reconsider the disputed yarn-import measures and consult apparel exporters and textile millers before introducing changes that affect the supply chain.
The associations have argued that frequent regulatory reversals make it difficult for manufacturers to plan procurement and production. They have also called for a policy framework that balances the interests of domestic textile mills with the need to preserve the competitiveness of export-oriented garment manufacturers.
For Bangladesh, the challenge is to protect domestic industrial investment without imposing additional costs or administrative delays on exporters operating in a highly competitive global market.
The latest concerns underline the importance of consistent trade and customs policies as the country prepares for changes in its international trade position and faces increasing competition from established and emerging apparel-producing economies.
Whether the concerns translate into a sustained shift in sourcing will depend on how quickly the government and industry resolve the outstanding import and logistics issues. For global buyers, the ability to secure competitively priced products and receive them on schedule will remain central to future sourcing decisions.