Bangladeshโs ready-made garment industry, the backbone of the countryโs export economy, is buckling under a combination of chronic power and gas shortages, climbing fuel costs and a depreciating currency, raising fresh doubts about its ability to retain its position as the worldโs second-largest apparel exporter.
Factory owners say production capacity at many plants has fallen by 25 to 30 percent in recent months because of insufficient gas and electricity supply, forcing some units to operate at barely half capacity. The Bangladesh Garment Manufacturers and Exporters Association has repeatedly pressed the government for emergency relief, including dedicated fuel cards, faster liquefied natural gas imports, additional floating storage and regasification units, and steep cuts to import duties on solar equipment. Read Here
Industry leaders say the roots of the crisis lie in years of underinvestment in energy infrastructure colliding with a deepening foreign exchange squeeze. Bangladeshโs gas prices have risen roughly 286 percent since 2017, while industrial electricity tariffs have climbed about 33 percent over five years, according to figures cited by the Bangladesh Knitwear Manufacturers and Exporters Association. Combined with higher transport costs and wages, total production costs have increased by at least 20 percent, manufacturers say, even as global buyers resist paying higher prices.
The energy strain has been compounded by a sharp slide in the taka, which has weakened against the dollar over the past year, making imported fuel and raw materials significantly more expensive. Falling foreign exchange reserves have intensified pressure on the central bank, which has tightened import rules even as factories scramble to secure dollars for fuel and machinery purchases. A coal shortage forced the temporary shutdown of a unit at the Payra power plant, one of the countryโs larger coal-fired stations, underscoring how thin the margin for error has become in the national grid.
The toll on the industrial base is already visible. By industry association tallies, roughly 400 garment and textile factories have closed over the past three years, with manufacturing intelligence firms separately counting 151 garment and textile plants shutting down between August 2024 and June 2026. Exporters attribute the closures to a mix of weak order books, rising input costs and persistent uncertainty in key overseas markets.
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Export performance has also softened. Garment earnings have declined by more than 3 percent in the current fiscal year, average unit prices have fallen, and the opening of letters of credit for raw material imports has dropped sharply, according to BGMEA data presented to the government during recent budget consultations. The association has asked for tax relief, including a cut in the export source tax and the withdrawal of additional duties on man-made fibre inputs such as polyester staple fibre, arguing these measures are essential to preserve competitiveness.
Looming over the immediate crisis is Bangladeshโs scheduled graduation from United Nations least developed country status in November, which will gradually phase out the duty-free access that has long underpinned its price advantage in the European Union, the industryโs largest market. While a transition period extends some benefits until 2029, manufacturers warn that the eventual loss of tariff preferences, layered on top of energy costs that are already eroding margins, could weaken Bangladeshโs standing against rivals such as Vietnam, India and Cambodia, all of which are courting buyers seeking to diversify sourcing.
Government officials have signalled some support, approving frameworks to expedite diesel supply and reviewing incentives for renewable energy investment, including reduced duties on solar panels and battery storage systems. Officials have also pointed to a planned multi-billion-taka upgrade of power infrastructure serving Dhakaโs industrial outskirts as evidence of longer-term commitment to the sector.
For now, though, manufacturers describe a precarious balancing act between meeting delivery deadlines for international brands and managing factory floors that cannot always count on steady gas pressure or grid power. Industry figures say a more durable fix will require sustained investment in energy infrastructure, diversification toward higher-value production, and credible policy continuity, rather than emergency interventions alone, if Bangladesh is to hold its place in the global apparel supply chain over the coming decade.