New Delhi: Bangladesh is considering imposing duties—which could be in the range of 10–20 percent—on imported cotton yarn, most of it sourced from India, ahead of an indefinite strike by textile millers in the country.
The imposition of customs duty by Bangladesh could halt a recovery in domestic cotton prices, which fell in 2025 due to duty-free imports by India.
According to industry estimates, removing duty-free access would raise yarn duties to nearly 37 percent, adding about 60 cents per kilogram to raw-material costs and directly affecting Bangladesh’s USD 28 billion knitwear export segment.
In 2024–25, Bangladesh’s yarn imports from India rose to 556.12 million kg, worth USD 1.79 billion, which is a 22.22 percent increase in volume and a 20.15 percent rise in value.
India is the largest supplier of cotton yarn to Bangladesh, while China is the top exporter of finished fabrics to the country. India exported cotton yarn valued at USD 3.57 billion in 2025, of which Bangladesh was the largest recipient, accounting for about 45.9 percent of its total yarn shipments.
The proposal, now under active consideration by the government, follows an impending strike by domestic textile millers, who said duty-free yarn imports have pushed them to the brink of collapse. Garment exporters, however, warn that any new duties would undermine Bangladesh’s global competitiveness just as the country prepares to graduate from least-developed-country (LDC) status in 2026.
Bangladesh had earlier considered imposing tariffs on Indian cotton yarn imports, with the Bangladesh Trade and Tariff Commission discussing this on 5 January.
On 12 January, the Bangladesh commerce ministry sent a letter to the National Board of Revenue (NBR) seeking the suspension of bonded-warehouse facilities that allow duty-free imports of cotton yarn in the 10–30 count range.
On 22 January, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) responded with a joint press conference calling for the removal of the suspension. Textile millers, led by the Bangladesh Textile Mills Association (BTMA), followed with their own press conference calling for its implementation.
Exporters versus millers
Garment exporters see the issue very differently. They argue that locally produced yarn is more expensive and often inconsistent in quality, while global brands prefer Indian supplies. Any disruption to imports, they say, would raise costs, delay shipments and impact Bangladesh’s global apparel markets.
In April last year, Bangladesh stopped allowing yarn imports from India through major land ports, including Benapole, Bhomra, Sonamasjid, Banglabandha and Burimari. The NBR said the decision was aimed at cutting down misdeclarations and unfair competition.
The BTMA had long complained that Indian exporters were under-declaring yarn counts and selling below cost. Russell then told Prothom Alo that Indian mills were exporting yarn and fabrics at prices lower than production costs, warning that Bangladesh’s textile sector could suffer the same fate as its once-dominant jute industry. The association has also called for anti-dumping duties and halting land-port imports until better monitoring infrastructure is in place.
Before the land-port restrictions, about 32 per cent of India’s yarn exports to Bangladesh moved overland. The shift to sea routes raised logistics costs and caused delays, particularly hurting small- and medium-sized mills in northern Bangladesh that depended on cheaper land transport. Despite the restrictions, profits did not recover.
Textiles and garments account for more than 80 per cent of Bangladesh’s exports and employ millions directly and indirectly. Under the South Asian Free Trade Area (SAFTA), Bangladeshi garments enjoyed duty-free access to India, while transshipment through Indian ports and airports reduced logistics costs.
That interdependence has now become a flashpoint. BTMA claims mills are sitting on unsold yarn stocks worth more than 120 billion taka, and says more than 50 mills have already shut down. Gas shortages have worsened the situation. Millers also warned that an indefinite nationwide shutdown could affect nearly one million workers.
After former Prime Minister Sheikh Hasina was ousted, Brazil overtook India as Bangladesh’s largest source of raw cotton, according to a December 2025 report by the U.S. Department of Agriculture. Still, India remains Bangladesh’s dominant supplier of cotton yarn, accounting for 82 per cent of imports in the 2024–25 marketing year.
Relations between Dhaka’s interim administration, led by Muhammad Yunus, and New Delhi have been strained. In April 2025, India withdrew a key transshipment facility that allowed Bangladeshi export cargo to move through Indian land customs stations, ports and airports. The decision followed comments by Yunus calling for extending the Chinese economy into India’s northeastern region, which he described as “landlocked”.
Indefinite strike
At a press conference held Wednesday, officials indicated that implementation of the proposed suspension had been postponed; however, it is uncertain whether the planned 1 February strike will go ahead. With national elections scheduled for 12 February, a final decision may fall to the next government.
Bangladesh’s textile mills say they are already at a breaking point. Last week in Dhaka, BTMA president Shawkat Aziz Russell announced that mills would be forced to shut down indefinitely from 1 February “out of sheer compulsion”, claiming that mill owners no longer have the capacity to repay bank loans.
According to a Dhaka Tribune report, Russell said the sector’s capital base had fallen by more than half, leaving mills unable to settle outstanding liabilities. “Even if we sell all our properties, it will not be possible to repay the debts,” he said.
“I have gone to all the ministries and relevant departments, but everyone is shifting responsibility to others. No concrete decision is coming,” he added.
(Edited by Shashank Kishan)
Also Read: Why India works. And why Nepal, Bangladesh, Pakistan keep breaking down