Bangladesh’s textile and apparel industry is facing a new wave of cost pressure following a 16.68% increase in retail electricity tariffs, a move that industry stakeholders warn could further squeeze exporters already struggling with rising utility expenses, soft global demand and intensifying competition from rival sourcing destinations.
The Bangladesh Energy Regulatory Commission (BERC) recently approved the tariff adjustment, raising the average retail electricity price from Tk 9.11 per kilowatt-hour (kWh) to Tk 10.63 per kWh. Transmission charges have also increased by 23.96%, adding another layer of cost to industrial consumers. The decision is part of the government’s broader effort to reduce subsidy burdens in the power sector and improve the financial viability of state-owned utilities.
For Bangladesh’s textile and apparel sector, which contributes more than 84% of the country’s export earnings, the timing is particularly challenging. Exporters are already navigating a difficult business environment marked by elevated energy costs, currency volatility, higher financing expenses and persistent price pressure from international buyers.
Industry analysts estimate that energy costs for many textile manufacturers have risen by 65% to 75% over the past three years due to repeated gas and electricity price adjustments. The latest power tariff increase is expected to further raise production costs across the textile value chain, particularly in spinning, weaving, knitting, dyeing and finishing operations, where electricity consumption is significantly higher than in garment assembly factories.
According to data from the Bangladesh Textile Mills Association (BTMA), the country operates more than 500 spinning mills and hundreds of fabric manufacturing and processing facilities that supply raw materials to the export-oriented garment industry. Many of these factories run around the clock and rely heavily on uninterrupted power to maintain production efficiency.
Energy-intensive segments such as spinning and dyeing are expected to bear the greatest burden. In a typical spinning mill, electricity can account for 20% to 30% of manufacturing costs, while dyeing and finishing units face additional expenses related to steam generation, water treatment and effluent management systems. Even a modest increase in power costs can therefore have a noticeable impact on operating margins.
The cost increase is likely to ripple through the supply chain. As textile mills face higher electricity bills, yarn and fabric prices may rise, placing additional pressure on garment manufacturers that depend on locally sourced inputs. While apparel factories generally consume less electricity than upstream textile mills, they face another challenge: most export orders are negotiated months in advance at fixed prices.
As a result, manufacturers often have limited ability to pass increased costs on to buyers.
This comes at a time when profitability across the apparel sector remains under pressure. Industry sources indicate that many garment exporters are operating with net profit margins of only 2% to 4%, particularly in basic apparel categories where competition is intense and buyer negotiations remain aggressive. For some factories, the latest tariff adjustment could significantly erode earnings from existing orders.
The development also raises concerns about Bangladesh’s long-term competitiveness. While the country remains the world’s second-largest apparel exporter after China, rival manufacturing hubs including Vietnam, India and Indonesia have continued investing in infrastructure modernization, logistics improvements and productivity-enhancing technologies.
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According to data from the World Trade Organization (WTO), Bangladesh exported apparel worth more than $47 billion in 2025, but growth has increasingly depended on efficiency gains rather than low labor costs alone. International brands are simultaneously demanding shorter lead times, stronger sustainability performance and lower prices, creating a difficult balancing act for suppliers.
The latest power tariff hike is expected to accelerate investment in energy efficiency and renewable energy solutions. Over recent years, many export-oriented factories have installed rooftop solar systems, energy-efficient motors, variable frequency drives and automated energy management systems to reduce operating costs.
Industry estimates suggest that rooftop solar installations can offset 20% to 30% of daytime electricity consumption in suitable facilities, helping manufacturers reduce dependence on the national grid while supporting sustainability targets demanded by global brands.
Bangladesh is already home to some of the world’s most environmentally certified garment factories, with more than 240 Leadership in Energy and Environmental Design (LEED)-certified facilities. Experts believe that further investment in energy-efficient technologies will become increasingly important as utility costs continue to rise.
Economists note that the tariff increase reflects broader structural challenges in Bangladesh’s power sector, including rising fuel import costs, capacity payments and subsidy obligations. While the adjustment may improve the financial health of energy utilities, it also underscores the growing importance of productivity and resource efficiency in maintaining export competitiveness.
For textile and apparel exporters, the immediate concern is managing higher operating expenses without losing orders in an increasingly price-sensitive global market. As energy costs become a larger component of manufacturing expenses, factories that successfully invest in efficiency, automation and renewable energy are likely to gain a competitive advantage.
The latest electricity tariff increase may therefore represent more than a temporary cost shock. For Bangladesh’s textile and apparel industry, it signals a transition toward a manufacturing model where productivity, technology adoption and energy management will play a decisive role in determining future growth and global competitiveness.
