History of Textile and Garment Industries in Bangladesh

Last Updated on 20/02/2021

History of Textile and Garment Industries in Bangladesh

Afsana Mishu
KCC Women’s College (Affiliated by Khulna University)
Khulna, Bangladesh
Email: afsana_mishu@yahoo.com


The textile and garment industries are the largest manufacturing activity in Bangladesh. It provides direct employment to about than 5 million people, which accounts for 45 per cent of all industrial employment in the country. The textile and clothing (T&C) industries provide the single source of economic growth in Bangladesh’s rapidly developing economy. Exports of textiles and garments are the principal source of foreign exchange earnings. This sector not grow up in a day. It has a long history which is highlighted in below.

Post 1971
From 1947 to 1971 the textile industry, like most industries in East Pakistan, was largely owned by West Pakistanis. During that period, in the 1960s, local Bengali entrepreneurs had set up their own large textile and jute factories. Following its separation from East Pakistan the newly formed Bangladesh lost access to both capital and technical expertise.

Until the liberation of Bangladesh in 1971, the textile sector was primarily part of the process of import substitution industrialization to replace imports. After the liberation, Bangladesh adopted export-oriented industrialization (EOI) by focusing on the textile and clothing industry, particularly the readymade garment (RMG) sector. Immediately after the founding of Bangladesh (1971), tea and jute were the most export-oriented sectors. But with the constant threat of flooding, declining jute fiber prices and a significant decrease in world demand, the contribution of the jute sector to the country’s economy deteriorated

Post 1972
In 1972 the newly formed government of enacted the Bangladesh Industrial Enterprises (Nationalisation) Order, taking over privately owned textile factories and creating a state-owned enterprise (SOE) called Bangladesh Textile Mills Corporation (BTMC). President Rahman promoted democracy and a socialist form of capitalism. The BTMC never managed to match the pre-1971 output and in every year after the 1975–1976 fiscal years, lost money. Until the early 1980s, the state owned almost all spinning mills in Bangladesh and 85 percent the textile industry’s assets (not including small businesses). Under the 1982 New Industrial Policy (NPI) a large number of these assets including jute mills and textile mills were privatized and returned to their original owners.

textile industry in bangladesh
Fig: Textile industry in Bangladesh

Post 1974
In the devastating famine in 1974, one million people died, mainly of starvation caused in part by the flooding of the Brahmaputra River in 1974, and a steep rise in the price of rice. Partly in response to the economic and political repercussions of the famine, the Bangladesh government shifted public policy away from its concentration on a socialist economy, and began to denationalize, disinvest and reduce the role of the public sector in the textile industry while encouraging private sector participation. The 1974 New Investment Policy restored the rights to both private and foreign investors. Bangladesh’s development model switched from a state-sponsored capitalist mode of industrial development with mainly state-owned enterprises (SOE) to private sector-led industrial growth.

Global restructuring processes, including two non-market factors, such as quotas under Multi-Fibre Arrangement (MFA) (1974–2005) in the North American market and preferential market access to European markets, led to the “emergence of an export-oriented garment industry in Bangladesh in the late 1970s and ensured the garment sector’s continual success.

The garment industry in Bangladesh became the main export sector and a major source of foreign exchange starting in 1980, and exported about $5 billion USD in 2002. In 1980, an export-processing zone was officially established in at the port of Chittagong.

Garment industry in Bangladesh
Fig: Garment industry in Bangladesh

By 1981, 300 textile companies, many small one had been denationalized often returned to their original owners. In 1982, shortly after coming to power following a bloodless coup, President Hussain Muhammad Ershad introduced the New Industrial Policy (NPI), most significant move in the privatization process, which denationalized much of the textile industry, created export processing zones (EPZs) and encouraged direct foreign investment. Under the New Industrial Policy (NPI) 33 jute mills and 27 textile mills were returned to their original owners.

The export of ready-made garments (RMG) increased from $USD 3.5 million in 1981 to $USD 10.7 billion in 2007. Apparel exports grew, but initially, the ready-made garments RMG industry was not adequately supported by the growth up and down the domestic supply chain (e.g., spinning, weaving, knitting, fabric processing, and the accessories industries).

From 1995 to 2005 the WTO Agreement on Textiles and Clothing (ATC) was in effect, wherein more industrialized countries consented to export fewer textiles while less industrialized countries enjoyed increased quotas for exporting their textiles. Throughout the 10-year agreement, Bangladesh’s economy benefited from quota-free access to European markets and desirable quotas for the American and Canadian markets.

Table of market share:

Export MarketUSA (Textile)USA (Clothing)EU (Textile)EU (Clothing)
Market Share in 1995<3%4%<3%3%
Market Share in 20043%2%3%4%

As the above table shows, the market shares for Bangladeshi textiles in the USA and both textiles and clothing in the European Union have changed during the time period of the ATC.

Until FY 1994, Bangladesh’s ready-made garments (RMG) industry was mostly dependent on imported fabrics-the Primary Textile Sector (PTS) was not producing the necessary fabrics and yarn.

Since the early 1990s, the knit section expanded mainly producing and exporting shirts, T-shirts, trousers, sweaters and jackets. In 2006 90% of Bangladesh’s total earnings from garment exports came from its exports to the United States and Europe.

Although there was concern, noted in an IMF report, that the WTO’s Multi-Fibre Arrangement, the Agreement on Textiles and Clothing (ATC), phase-out would shut down the textile and clothing (T&C) industry, the Bangladesh textile sector actually grew tremendously after 2004 and reached an export turnover of US$10.7 billion in FY 2007. Bangladesh expected to suffer the most from the ending of the MFA, as it was expected to face more competition, particularly from China. However, this was not the case. It turns out that even in the face of other economic giants; Bangladesh’s labour is “cheaper than anywhere else in the world.” While some smaller factories were documented making pay cuts and layoffs, most downsizing was essentially speculative – the orders for goods kept coming even after the MFA expired. In fact, Bangladesh’s exports increased in value by about $500 million in 2006.

By 2005 the ready-made garments (RMG) industry was the only multi-billion-dollar manufacturing and export industry in Bangladesh, accounting for 75 per cent of the country’s earnings in that year.

Bangladesh’s export trade is dominated by the ready-made garments (RMG) industry. Bangladesh’s garment exports – mainly to the US and Europe – make up nearly 80% of the country’s export income. Exports of textiles, clothing, and ready-made garments (RMG) accounted for 77% of Bangladesh’s total merchandise exports in 2002.

Textile exports from Bangladesh to the United States did increase by 10% in 2009. Currently, the textile mills provide 70% of national exports. This proportion is even higher in Bangladesh. In Bangladesh, the number of employed workers in the textile industry increased by 400 000 in 1990 to 2 million in 2004, and the number of enterprises – from 800 to 4000. Nine out of ten people employed in the industry – are women. In general, the state of the textile industry depends on well-being of 10-12 million people in Bangladesh. By IMF estimates, as a result of the abolition of quota.

The Textile and Clothing Sector at a Glance 

Sub-sectorNumber of unitsInstalled machine capacityProduction capacityEmployment
Textile spinning350 7.5 millionspindles (0.2 million rotors)1,800 million kg400,000
Textile weaving40025,000 shuttleless/shuttle loom1,600 million meter80,000
Specialised textile and power loom1,06523,000 shuttleless/shuttle loom400 million metre43,000
Handloom148,342498,000 looms837 million metre1,020,000
Knitting, knit dyeing2,80017,000 knit/Dy/M4,100 million metre324,000
Dyeing and finishing3101,720 million metre33,000
Export oriented readymade garment (clothing)4,500475 million dozen2,000,000
Other related sectors—-—-600,000

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