Garments Industry in Bangladesh

The Garments Industry in Bangladesh: An In-Depth Look at a Textile Powerhouse

The largest manufacturing sector and a significant contribution to Bangladesh’s GDP is the readymade garments sector. Bangladesh is currently the world’s second-largest exporter of ready-made clothing, with an annual export value of almost $30 billion. Bangladesh’s export earnings reached a new high of USD 52.08 billion in FY22 overcoming concerns related to COVID on a global scale. As usual, Readymade Garments (RMG), which received USD 42.61 billion, received the majority of the funds.

There are currently roughly 4000 garment factories in Bangladesh, and this number is rising. To understand the impact of the garments industry in Bangladesh, it is important to have an in-depth look at its emergence and development.

History of the Garments Industry in Bangladesh

When Reaz Garments exported its first consignment to the USA and made 69,000 USD, the RMG industry’s journey began. The first company wholly focused on exports, Desh Garments Ltd. was founded in 1979, and they were the ones to lead the actual milestone. However, the ready-to-wear and clothing manufacturer company in Bangladesh is growing nowadays.

Despite a rapidly expanding domestic market, Bangladesh’s RMG industry has been growing since the late 1970s predominantly as an export-oriented sector. The sector swiftly rose to a position of prominence in terms of GDP contribution, employment, and foreign exchange earnings.

Most importantly, the growth of the RMG sector produced a group of entrepreneurs that created a strong private sector.

Impact of the Garments Industry on the Economy of Bangladesh

Bangladesh’s economy has transformed because of the garment industries, which have given millions of people jobs. Additionally, the clothing industry contributes significantly to the financial growth of our nation. According to statistics, textile exports surged by 60% between 2011/2012 and 2017/2018, making up close to 85% of all exports from the nation.

Currently, the RMG industry accounts for almost 83 percent of Bangladesh’s total export revenue. Although this number tends to change from year to year, it has been in the 80s for a while. The contribution of the RMG sector to the overall Gross Domestic Product (GDP) is approximately 11–12%.

The Garments Industry in Bangladesh: An In-Depth Look at a Textile Powerhouse

The RMG industry has taken over as the nation’s top export earner. This business has improved socioeconomic prospects by generating a significant amount of employment opportunities, primarily for the nation’s poor, illiterate female workforce. By manufacturing high-value commodities on a big scale, the industrial sector can increase social productivity by giving a large number of workers high-paying jobs. Additionally, developing nations can make a significant foreign exchange by exporting manufactured goods, and this money can then be invested in newer models of equipment and technologies to enable quick advancement in technology.

The rising understanding that the development of the agricultural sector, one of the cornerstones of the country’s economy, significantly depends on its backward and forward linkage with the industrial sector serves as further evidence of the significance of industrial development as an engine of Bangladesh’s economic growth. As a result, through creating jobs, the RMG industry has significantly contributed to the empowerment of women.

How the Textile Industry in Bangladesh Has Improved?

The dedicated workforce in Bangladesh is primarily responsible for the growth of the textile sector. To reach this goal, they put in longer hours at the office. As a result, the nation’s per capita income and citizens’ living standards have increased recently. Second, the nation gained a beneficial opportunity to trade in the segment of ready-made clothing with the United States and other European nations.

The government policies that fostered the expansion of textiles in Bangladesh encouraged these opportunities. Foreign investments were encouraged by liberal government policies. Bangladesh’s garment industry is well-known and plays a significant role in the current global market. The nation’s textile sector produces specialized textile products, knitwear, and woven clothing. These goods are the most profitable for the nation’s exports.

Natural gas, inexpensive labor, and energy availability have been the main factors supporting Bangladesh’s textile sector over the years.

Challenges Faced by the Textile Industry

The textile industry faces many barriers when it comes to expansion and development. The first step to overcoming the drawbacks is knowing what they are –

  • One of the main issues facing this sector is a lack of product diversification. Even though Bangladesh has been exporting clothing for about 40 years, low-cost items are increasingly popular
  • The RMG sector in Bangladesh continues to lack sufficient backward connection support. As a result, we typically need to import raw resources from outside sources, including other nations.
  • The lack of efficiency and infrastructure development in Bangladesh is the country’s major RMG sector disadvantage.

Reasons Behind the Growth of the Textile Industry

The textile industry plays a significant role in the development of Bangladesh’s economy. The factors that have contributed to the growth of this sector are –

  • Low Labor Cost: Bangladesh is a developing nation, thus labor expenses in any manufacturing or industrial sector are lower. Bangladesh has a sizable workforce, particularly among the unskilled. You can purchase Bangladeshi clothing at a competitive price because of the low cost of production. As a result, despite having a sizable capability for the production of clothing, Bangladesh has established itself in a market that is competitive with countries like China, Vietnam, and India.
  • Government Initiatives: The government of Bangladesh implemented an import policy for the growth of the RMG industry in the 1980s and provided bonded warehouse facilities rather than a duty drawback system for garment companies that were entirely focused on exports.
  • On the other hand, 100% export-oriented garment companies can simply import the necessary fabrics and accessories under the duty-free system by employing the system of bonded storage facilities.
  • Establishment of BGMEA: To support and uphold the interest of RMG makers and exporters in Bangladesh, the Bangladesh Garment Makers and Exporters Association (BGMEA) was founded in 1983. It is one of Bangladesh’s top trade associations. And it is actively contributing to the industrial development of the nation by supporting government policy, offering services to members, empowering garment workers, and promoting social compliance in manufacturing facilities.


In Bangladesh’s economy, the Ready-Made Garments (RMG) sector holds a special place. It is Bangladesh’s largest export sector and has shown incredible growth over the past 25 years. Many leading factories like Posh Garments Ltd have been contributing to the employment and economy of Bangladesh.

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