Bangladesh falling behind Pakistan in home textile exports

Bangladesh has faced challenges in regaining lost home textile orders, a substantial portion of which shifted to Pakistan about two years ago. This shift was primarily driven by Bangladesh's abrupt doubling of gas prices and a major devaluation of the Pakistani rupee against the US dollar. Additionally, ongoing labor unrest in industrial areas and extended political instability in Bangladesh have further impacted export revenues.

Pakistan has several inherent advantages in the textile sector. As the world’s seventh-largest cotton producer, according to Statista, Pakistan has a domestic supply that Bangladesh lacks. Furthermore, Pakistan benefits from the European Union's Generalised Scheme of Preferences Plus (GSP+), providing preferential access to the EU market, while Bangladesh currently receives only standard GSP benefits. When the Bangladesh government unexpectedly raised gas prices by 150.41 percent in February 2023—from Tk 11.98 per unit to Tk 30 per unit—many leading home textile exporters refrained from accepting new orders due to the sharp increase in production costs. This led to a further shift in orders to Pakistan. Khorshed Alam, chairman of Little Group, noted that this decision caused significant financial losses for local textile exporters, as their work orders were priced based on previous, lower production costs.

For instance, if a large company previously paid Tk 68 crore in monthly gas bills, the cost surged to Tk 126 crore post-hike. Consequently, some millers temporarily paused new orders to manage these increased expenses. However, according to Alam, home textile exports from Bangladesh are showing gradual signs of recovery.

Pakistan’s advantages are also reflected in its export performance. In August, Pakistan's textile exports hit a 26-month high, reaching $1.64 billion—a 13 percent year-on-year increase—boosted by supportive government policies and initiatives from the Special Investment Facilitation Council (SIFC), according to SAMAA TV. Pakistan’s Bureau of Statistics data shows textile exports were $1.46 billion in August last year, with notable growth across knitwear, bedwear (up 15 percent), and ready-made garments (up 28 percent) sectors.

Analysts attribute Pakistan’s export growth to its strategic market position, given Bangladesh’s internal challenges and international sanctions on China, prompting global importers to explore alternatives. In contrast, Bangladesh’s home textile exports, including bedsheets, tents, and rugs, decreased by 2.05 percent to $851.01 million in the 2023-24 fiscal year, based on data from the Export Promotion Bureau (EPB).

Previously, Bangladesh’s home textile exports had exceeded $1 billion in FY21, with a record 49.17 percent annual growth, followed by another substantial increase to $1.62 billion the following year. However, the gas price hike disrupted this trend, causing exports to decline to $1.09 billion, nearly one-third less than the prior year.

Md Shahidullah Chowdhury, executive director of Noman Group, which contributes over 70 percent of Bangladesh’s home textile exports, mentioned that their monthly export target was $30 million, but current shipments have dropped to $25 million. Of this, $15 million is from home textiles, with $10 million from terry towels. Chowdhury highlighted that the company is working to regain lost business but faces obstacles like low gas pressure and labor disruptions.

Monsoor Ahmed, former CEO of the Bangladesh Textile Mills Association, echoed these challenges, noting that five to seven major exporters remain active while others closed down in recent years. Insufficient gas pressure has kept mills from operating at full capacity, limiting production and reducing competitiveness.

In contrast, Pakistan has leveraged preferential tariffs on about 66 percent of EU tariff lines under the GSP+ since 2014, which has bolstered its export capacity to the EU. Between 2014 and 2022, Pakistan’s exports to the EU increased by 108 percent, while imports from the EU rose by 65 percent, growing total trade volume from 8.3 billion euros in 2013 to 14.85 billion euros.