2026 comes with two big events for Bangladesh and the industry. Bangladesh gets its new President and Prime Minister as the national election tool place last February where Bangladesh Nationalist Party (BNP) led the polls. What does it mean for the textile and apparel industry? Also, the interim government secured a tariff deal with USA just before leaving the office. Bangladesh textile and apparel exports will be charged zero tariff, if it is made with US cotton imported from USA. How does this impact our exports to US? What are the mutual benefits, if any?
Political context inevitably shapes industrial outcomes. This has been seen in Bangladesh context, as government changes, new policies take place with different impacts on regulatory bodies related to the industry. During earlier BNP tenures, the textile and apparel industry experienced phases of notable expansion, driven by pro-business signaling, export-oriented policy support, and infrastructure initiatives. Investment flows accelerated, industrial zones expanded, and private sector confidence generally strengthened. Also hopefully, foreign direct investment will rise, as inventors generally find it more reliable to work under a stable elected government compared to an interim government structure.
This time BNP came up with an election manifesto that has a lot for the growing textile and apparel industry. We tried to find out how their policies may impact the industry. The following table illustrates the policy initiatives outlined in the manifesto and the risks associated with them.
| Policy initiatives | Associated risks |
| Trade, market access and export diversification | |
| FTA initiatives, trade liberalization/ deregulation, logistics hub, integration with global e-commerce platforms can lower friction for exporters like custom time, cost, market access and support diversification beyond the main export destinations | FTAs can also increase competitive pressure at home with more imports. |
| Export diversification, economic diplomacy and trade expansion to new regions (South America/Africa) align with the long-standing need to reduce dependence on a narrow export basket. | Diversification is often promised, delivery requires sector specific incentives, skills, and lead time improvements. |
| Industry policy, incentives, and direct textile instrument | |
| Bonded facilities for export-oriented industries directly matters for RMG exports (duty free inputs, cashflow) | |
| Creation of ‘National Trade Competitiveness Council’, ‘Strategic Textile Fund’ and the ‘National Green Industry Policy’ are the most explicitly textile-relevant proposal in the manifesto. | Green policy without low-cost financing and enforcement can become paper-work heavy but with low-impact. |
| Energy reliability and cost | |
| “Uninterrupted electricity and gas supply to industries” is explicitly stated and would be immediately relevant for utilization rates, lead time, and costing. Practical implication for textiles- if implemented, this could reduce outage risk and cost volatility. | Energy reforms are politically hard; outcomes depend on execution, not the checklist |
| Business environment and investment climate | |
| Single-window clearance/one-stop services, digitalizing VAT/customs refund, full approval digitalization- would directly reduce transaction costs for exporters | |
| Simplifying VISA/work permits, protect investors- could help bring in higher-value textile investment (e.g. MMF, chemicals, capital machinery, testing, recycling) | |
| Support for SMEs, industrial park capacity, licensing simplification- matters for many back-ward linkage industry and sub-suppliers | Incentives can get captured by larger players unless SMEs have tailored access to finance, compliance support and serviced land. |
| Labor and industrial relation | |
| Price-indexed wage reviews every two years, trade union/CBA rights, 6 months paid maternity leave, elimination of child labor, and other welfare measures- could improve social compliance credibility and worker retention | Cost impacts are real if productivity, skills and industrial upgradation do not rise in parallel, so welfare packages should be planned along with productivity improvement. |
The manifesto contains several high-relevance leversfor textiles—especiallyenergy reliability, trade/FTAs, bonded facilities, digitized business services, and the proposed Strategic Textile Fund. But these are framework commitments, not implementation plans. The opportunity is real, but competitiveness gains depend on execution details.
Though not initiated by the newly elected government but inheriting the latest trade deal with the USA comes with lot of promise. The reciprocal trade agreement with the United States that introduces zero tariffs on textile and apparel exports produced using US origin cotton and man-made fiber. The deal also reduces the general reciprocal tariff rate on Bangladeshi goods entering the U.S. market to 19%. Finalized after nine months of negotiations, the agreement establishes an implementation mechanism for qualifying zero- tariff garments.
officials expect the provisions to strengthen the competitiveness of the country’s apparel sector while providing modest cost relief across other export categories. Signed by senior trade representatives of both countries and approved by Bangladesh’s Council of Advisers, the agreement will take effect following formal notifications. Policymakers view the development as a step toward deeper bilateral trade integration and improved market access.
Bangladesh is world’s second-largest cotton importer with imports projected to reach 8.4 million bales in FT 2025-2026, with India being the top supplier. However, India has slipped to second position in 2024 while Brazil taking the top spot in cotton exports to Bangladesh. Bangladesh imported 23% of its total cotton imports from Brazil while 16.9% from India. US cotton, which is also popular as the finest cotton quality accounts only accounts 7.2% of the total need. However, the scenario is set to change. A comparison of a 100% cotton shirt cost made of different origin cottons being exported to US is illustrated here for understanding. Assuming every shirt on avg. requires 0.30 kg of cotton and an industry avg. of $2.00 CM (cutting and making) cost the final cost of the shirt is calculated with US tariffs while using non-US cotton (from India and Brazil) and US cotton. Bangladeshi products face a 12% MFN tariff along with a 19% reciprocal tariff. The deal only eliminates the reciprocal tariff when US cotton is used.
| Indian Cotton | Brazilian Cotton | US Cotton | |
| Landed avg. cotton import price | $1.75 | $1.65 | $2.35 |
| Cotton cost per shirt | $0.525 | $0.495 | $0.705 |
| CM cost per shirt | $2.00 | $2.00 | $2.00 |
| FOB price | $2.525 | $2.495 | $2.705 |
| US tariff (MFN + reciprocal) | 31% = $0.783 | 31% = $0.773 | 12% = $0.325 |
| Total cost per shirt | $3.32 | $3.27 | $3.03 |
The comparison shows that under the deal, using US cotton provides approximately 24~29 cents advantage over using non-US cotton while exporting to the US. Though is looks a mere amount but in aggregation it translates to a few million dollars which can significantly boost apparel exports to the US. Also, over-dependence on Indian cotton, which is already declining to Brazilian cotton would further plummet as imports from US rise. This already sent a shockwave through the Indian cotton and yarn industry as their stock prices are reported to plummet by around 6% after the news break. For Bangladesh it is a slight trade advantage which if utilized carefully can boost our economy. The deal also holds for MMF imported from US. Means, MMF garments exports to US will have zero reciprocal tariff if used synthetic fibers imported from US. Currently, we import most of our synthetic items from China, and US synthetic products are rarely used.
If leveraged strategically, these developments can strengthen Bangladesh’s export competitiveness and sourcing flexibility. The real gains, however, will depend on disciplined execution, productivity improvements, and smart supply chain decisions rather than policy shifts alone.
