s political unrest continues to stalk Bangladesh, questions are emerging about the future of its robust textile industry. With protests and uncertainty undermining the stability of one of the world’s largest textile exporters, the spotlight is turning to neighboring countries in the region with well-established textile sectors. Could this turmoil present an opportunity for Pakistani firms to increase their market share?

Bangladesh is facing its most severe political crisis since its independence, following the resignation of Prime Minister Sheikh Hasina and rumors of a hostile takeover attempt of the Bangladesh Garment Manufacturers and Exporters Association. The nation’s textile industry, which accounts for 84 percent of its total exports, is currently valued at $19.04 billion and is projected to grow to $25.25 billion by 2029.

As the second-largest apparel supplier of the world after China, Bangladesh is favoured by Western fashion powerhouses like H&M and Zara due to low production costs, preferential trade agreements and well-developed infrastructure. External factors, such as sanctions on Chinese labour and cotton, make Bangladesh a key player on the global stage.

Recent political unrest, driven by student-led protests over the reinstatement of public sector job quotas, is causing significant disruptions. The widespread protests, coupled with communication shutdowns, have led to forced factory closures, looting and delays in export shipments.

This volatile business environment has undermined investor confidence and disrupted supply chains. Additionally, negotiations for a new Partnership and Cooperation Agreement between Bangladesh and the European Commission have been halted. This agreement was intended to strengthen Bangladesh’s trade relationship with the EU, a major trading partner that imported $23.8 billion worth of Bangladeshi textiles in 2023.

Nabila Massrali, the EU’s foreign affairs spokesperson, has stated that the PCA negotiations scheduled for September have been postponed indefinitely. This delay could be attributed to concerns that Bangladesh might fail to meet the EU’s development criteria, which include sustainable and inclusive growth, security and human rights, especially following the violent protests that reportedly claimed more than 300 lives.

Opportunity

This instability could potentially benefit other regional players with similarly capable textile setups. Pakistan is positioned as a viable alternative in the regional market. Contributing approximately 8.5 percent to Pakistan’s GDP and employing 15 million people — about 25 percent of the total workforce — the textile sector makes a significant contribution to the country’s export revenue. Industry leaders like Interloop, Style Textile and Artistic Milliners own state-of-the-art facilities and are well-connected to major clients, such as Hugo Boss, Zara and Levi’s.

These players are well-positioned to leverage their diverse client portfolios to gain some of the knitwear business from Bangladesh. Dr Gohar Ejaz, patron-in-chief of the All Pakistan Textile Mills Association, recently spoke for the industry: “I believe that $5 billion worth of apparel and garment orders from Western clothing brands can shift from Bangladesh to Pakistan.” Such a shift could spur Pakistan’s textile sector, creating more jobs and generating export revenue.

Another challenge for Pakistan is the interconnected nature of the textile market, which may affect demand for raw materials. Bangladesh, despite being a major textile exporter, sources most of its raw materials from other countries. 

However, Pakistan’s textile industry also faces some challenges. Dr Ejaz highlighted the country’s high energy prices blaming those on “corrupt contracts, mismanagement and incompetence.” Additionally, rising labour costs due to consistent inflation pose a further obstacle. To capitalise on the ‘opportunity’, Pakistani companies will need to enhance efficiency and navigate the fluctuating macroeconomic environment.

Another challenge for Pakistan is the interconnected nature of the textile market, which may affect demand for raw materials like cotton and yarn. Bangladesh, despite being a major textile exporter, sources most of its raw materials from other countries, including Pakistan.

According to the United Nations COMTRADE database, Pakistan’s cotton exports to Bangladesh amounted to $484.64 million in 2023. A decline in Bangladeshi textile production could reduce demand for Pakistani cotton and yarn. Given the uncertainty of Bangladesh’s yarn sourcing in the near future, Pakistan may face a decline in international payments if it fails to capitalise on this opportunity.

Indian textiles

India, another major player in the textile market, could also benefit from a decline in Bangladeshi exports. With its well-established infrastructure and low wages, India is likely to intensify efforts to attract new business, leveraging its own production strengths.

However, this shift could disrupt investments made by some Indian families, particularly from Tamil Nadu, in the Bangladeshi textile industry. Reports suggest that 25 percent of Bangladeshi manufacturing units are Indian-owned. A shift in dynamics could affect these investments. Whether these companies will move operations back to India remains to be seen. Additionally, India’s own textile exports, valued at $11.1 billion in 2024, could face challenges due to disruptions in payment systems and law and order issues affecting bilateral trade with Bangladesh.

Global market dynamics also play a crucial role in shaping the textile industry’s future. Dr Sheng Lu, a professor of apparel studies at the University of Delaware, has highlighted that political instability often decreases a country’s attractiveness as an apparel-sourcing destination. He noted on X, “Any further drama in Bangladesh could make US fashion companies even more cautious about sourcing from the country or prompt them to take additional measures to mitigate sourcing risks.”

As global buyers seek alternative suppliers to avoid risks associated with Bangladesh’s instability, they may explore other markets, such as Egypt and Jordan, which currently benefit from duty-free access to the US.

Looking ahead

The appointment of Nobel Laureate Muhammad Yunus as chief adviser of Bangladesh’s interim government signals efforts to restore order and economic stability. The coming months will be critical in determining whether Bangladesh can regain buyers’ confidence.

Meanwhile, Pakistan’s textile industry is at a crossroads. It has the potential to emerge as a leading player in the global textile market. Whether it can navigate its challenges and seize this opportunity remains to be seen.

The writer is a LUMS alumnus with a BSs in finance and experience in the textile sector of Pakistan