Over the past five decades, Bangladesh’s ready-made garment (RMG) sector has emerged as a vibrant and resilient driver of economic and social transformation. Today, it accounts for 80–85% of the country’s exports, underscoring its position as one of the most significant industrial success stories among developing economies.
While the European Union (EU) remains the dominant market (58–61%), the sector has made notable progress in diversification, workplace safety, and sustainability, further strengthening Bangladesh’s position as a leading global sourcing hub.
Since the foundation in the late 1970s, the sector’s value of clothing exports was $31.57 million by 1983, following a clear growth–shock–recovery trajectory, contracting by −18% during COVID-19 (figure 1), with exports projected to reach ~USD 41.2 billion. However, as figure 2 shows, exports remain heavily concentrated in knitwear (~53–54% during 2023–2025), reflecting strong specialization but also underscoring the need to diversify into higher-value and more sophisticated product segments to sustain long-term competitiveness.
Diversification and Value Upgradation
Building on this growth trajectory, Bangladesh’s RMG sector is now navigating emerging challenges driven by evolving global market dynamics and shifting brand expectations, prompting a strategic transition toward green and digital transformation anchored in sustainability. The country’s achievement of 284 LEED-certified green factories has become a significant competitive advantage, reducing long-term operational costs, strengthening internal capabilities, and supporting a shift toward more diversified and higher-value production.
At the same time, the adoption of digital innovations such as Digital Product Passports is enhancing transparency and traceability across the value chain, reinforcing Bangladesh’s reputation as a trusted, responsible, and future-ready sourcing destination. This transformation is not only strengthening global competitiveness but also continuing to generate large-scale, inclusive employment opportunities, particularly for women and youth, positioning sustainability as a powerful driver of both economic growth and social progress.
As we can see in the review by Bizbd, leveraging this sustainability-driven transformation, the sector’s growing embrace of automation is unlocking new efficiency gains. With ~35% automation and ~40% CAD adoption, productivity has grown by ~4.19% annually, signalling a shift toward technology-led production, yet this momentum has not fully translated into higher-value diversification.
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To bridge this gap, efficiency gains must be complemented by strategic value upgrading, including product diversification, stronger design and branding capabilities, investment in advanced materials and R&D, and deeper supply chain integration.
Skills Transformation and Workforce Shift
Despite steady progress, Bangladesh’s RMG value chain remains layered and uneven, with automation increasingly reshaping job structures and creating new roles in digital production and supply chain management. However, without proactive intervention, up to 60% of jobs could be affected by 2040, underscoring the urgency of large-scale reskilling and workforce transition.
The sector continues to be bottom-heavy, dominated by unskilled (45%) and semi-skilled (35%) workers, with limited managerial and technical capacity, alongside persistent gaps in mid-level skills and women’s leadership.
While the Garments Accessories and Packaging (GAP) sector demonstrates stronger skill intensity and value addition, and the jhut segment remains constrained by informality (figure 3), these structural imbalances highlight the need for system-wide upskilling, stronger management capacity, and deeper technology integration.
Addressing these gaps is critical for shifting the sector from a cost-driven model to a productivity- and value-led ecosystem, enabling higher-quality jobs, sustained competitiveness, and a more inclusive industrial transformation.
Circularity and Sustainability Pathways
To remain competitive in a rapidly changing global market, Bangladesh’s RMG sector must increasingly focus on circularity and resource efficiency, reducing dependence on imported materials while leveraging automation to optimize production and energy use. The sector already generates substantial textile waste, estimated at up to 700,000 tons annually, yet only 5–7% is recycled into apparel-grade inputs, with a significant share exported as raw waste, reflecting a largely linear production model.
This gap highlights not only a missed economic opportunity but also a skills and technology constraint, as limited technical capacity and inadequate integration of advanced recycling technologies hinder circular adoption. As global pressures intensify, particularly under frameworks such as the EU Green Deal (figure 4), scaling sustainability is no longer optional but a strategic necessity.
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Accelerating circular investments, alongside targeted reskilling and automation-driven innovations, could reduce material imports, unlock up to USD 1.2 billion in new value, and position Bangladesh competitively in an increasingly sustainability-driven global marketplace.
For instance, as illustrated in the graph, a business-as-usual scenario shows material use rising sharply, driven by continued reliance on virgin fibre, with waste increasing alongside production growth. In contrast, a circular transition, enabled by improved technology and automation, reduces waste and increases the use of recycled fibre, helping to stabilize overall resource consumption.
Aligned with global shifts such as the EU Green Deal, scaling recycling, reuse, and circular business models can not only enhance resource efficiency and lower material demand, but also unlock significant economic value, reinforcing the sector’s move toward a more sustainable and technology-driven production system.
Bangladesh’s global leadership will now depend not on cost advantage alone, but on its ability to transition toward a high-value, sustainable, and skill-intensive industrial ecosystem.
As Bangladesh moves toward LDC graduation in a Green Deal driven global market, advancing diversification, circularity, and value upgrading will require stronger collaboration among industry, brands, and government.
Brands such as H&M, Primark, Lindex, Inditex, Uniqlo, Bestseller, Marks & Spencer, and Decathlon, together with private sector stakeholders and development partners, are actively partnering with local manufacturers to advance skills upgrading, environmental sustainability, and system-wide transformation, reinforcing more resilient and competitive supply chains. However, scaling this transition will depend on fair pricing, long-term partnerships, and co-investment models that effectively support SMEs.
Linking this to broader shifts in automation, sustainability, and skills upgrading, unlocking value will require blended finance, digital and green technologies, and enabling policy frameworks. Development partners like Swisscontact are playing a catalytic role through programmes such as Shudokkho, Sarathi, BYETS, PROGRESS, and InSPIRE advancing skills, financial inclusion, women’s empowerment, and ESG integration.
Ultimately, a coordinated ecosystem across policy, finance, technology, and skills is essential to position Bangladesh’s RMG sector as a resilient, sustainable, and globally competitive value chain.
About the Author
For over two decades, Salma Akhter has been actively engaged in Bangladesh’s Ready-Made Garment (RMG) sector as a committed development practitioner. With more than ten years at Swisscontact, she has played a key role in advancing multiple initiatives across the industry. Her expertise spans stakeholder management, strategic planning, and sustainable business model development, alongside strong capabilities in project management and cross-functional collaboration with international brands, trade associations, financial institutions, and development partners.