As Bangladesh prepares to implement the budget for the 2026–27 fiscal year, expectations are running high across its most vital economic sector – the textile and apparel industry. Against the backdrop of global economic uncertainty, rising operational costs, and intensifying competition, industry leaders are looking toward fiscal policy not merely as a financial instrument but as a catalyst for growth, resilience, and transformation.
As Bangladesh prepares to implement the budget for the 2026–27 fiscal year, expectations are running high across its most vital economic sector – the textile and apparel industry. Against the backdrop of global economic uncertainty, rising operational costs, and intensifying competition, industry leaders are looking toward fiscal policy not merely as a financial instrument but as a catalyst for growth, resilience, and transformation.
In the latest episode of Textile Today Newsroom Explainer, Enamul Hafiz Latifee, Chief Research Officer of Textile Today Innovation Hub, sat down with the leading textile and apparel sector entrepreneur Quamar Alam, Director, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) & Managing Director, Florence Group, to discuss what the 2026-2027 budget means for Bangladesh’s textile and apparel sector.
The conversation opened with a crucial question: Can the government balance its revenue ambitions with the need to support the country’s export-driven industries?
With discussions suggesting a significantly larger national budget and an increased National Board of Revenue (NBR) target, Latifee pointed out that higher tax collection goals often translate into additional pressure on the private sector.
Quamar Alam acknowledged the importance of taxation in sustaining government functions and national development. Tax, he noted, is a vital tool through which governments finance public services and infrastructure. However, he emphasized that exporters in Bangladesh already contribute through various channels, including source tax, VAT, and import-related taxes. The bigger concern, according to Quamar Alam, is timing.
Global manufacturers are currently navigating extraordinary challenges. Geopolitical conflicts, including tensions in the Middle East and the prolonged Russia-Ukraine war, have disrupted supply chains and driven up energy costs. Commodity demand has weakened worldwide, resulting in slower export growth for Bangladesh.
“Manufacturers are under immense pressure,” Alam explained, arguing that maintaining taxes at a reasonable level could provide much-needed relief to exporters trying to remain competitive. The discussion then shifted to a broader economic picture.
Although Bangladesh aims for GDP growth of around 6.5 percent, inflation remains stubbornly high. Rising fuel prices, energy costs, and global supply disruptions continue to push production expenses upward.
These inflationary pressures inevitably raise expectations for higher wages. Yet Quamar Alam questioned whether manufacturers currently possess the financial capacity to absorb another significant increase in labor costs. He pointed out that the industry has already undergone substantial wage adjustments in recent years, alongside annual increments. For businesses operating on thin margins, continuously escalating costs threaten long-term sustainability.
For Bangladesh to maintain economic momentum, Quamar Alam argued, private sector investment must remain strong. This requires one essential ingredient: accessible financing.
He expressed concerns that extensive government borrowing from banks could crowd out private sector credit. Banks naturally prefer secure government lending opportunities, potentially limiting capital availability for businesses seeking working capital or expansion financing. “If investment slows, GDP growth slows. If GDP growth slows, exports cannot thrive,” he observed.
Another major theme of the discussion was the industry’s transition from cotton-based manufacturing toward man-made fiber (MMF) production. Globally, man-made fibers account for approximately 78 percent of garment production, and demand continues to rise. Bangladesh’s heavy reliance on cotton-based products raises concerns about future competitiveness. However, Latifee highlighted a critical challenge- transitioning to MMF production requires massive investments.
While establishing a medium-sized garment factory may require around BDT 100 crore, setting up man-made fiber production facilities could demand investments exceeding BDT 1,000 crore. Such a transformation is beyond the reach of many domestic investors without external support. Quamar Alam agreed that government intervention would be essential.
He proposed several measures, including investment incentives, one-stop service facilities for investors, improved conditions for foreign direct investment (FDI), and dedicated government-supported funding mechanisms. Drawing comparisons with other countries, he argued that strategic sectors rarely achieve significant growth without active government participation.
Energy availability also emerged as a major obstacle.
According to Quamar Alam, obtaining gas connections for industrial projects can take years in Bangladesh, severely undermining investor confidence. Efficient infrastructure and administrative reforms, he suggested, are prerequisites for industrial transformation. The conversation also touched upon Bangladesh’s growing leadership in sustainable manufacturing.
The country is home to some of the world’s highest-rated green garment factories, positioning itself as a global leader in environmentally responsible apparel production.
Yet Latifee, raised concerns about reports suggesting possible increases in taxes on green technologies and machinery. Such measures, if implemented, could discourage future sustainability investments.
Quamar Alam argued that green transformation delivers long-term benefits despite higher upfront costs. Reduced energy consumption, water savings, and operational efficiencies generate value over time. Rather than creating additional barriers, he implied that policymakers should encourage these investments.
Beyond infrastructure and fiscal incentives, innovation emerged as another critical area requiring attention.
Latifee emphasized that countries competing successfully in global textile markets actively support research and development through grants and innovation funding. Bangladesh, however, often relies primarily on traditional financing mechanisms.
Quamar Alam acknowledged that although textile-related education programs have expanded significantly, the country still lacks visible breakthroughs in textile innovation.
Reflecting on a visit to the Netherlands, he described witnessing university researchers developing advanced fabrics with innovative functionalities, recycling technologies, and entirely new material applications. Such examples illustrate the importance of stronger collaboration between academia, industry, and government to foster a culture of research-driven growth.
The discussion further explored the need for improved international branding and market development initiatives.
Bangladesh’s garment sector directly employs millions of workers while supporting an extensive ecosystem of textile mills, accessories manufacturers, transport providers, logistics operators, and port services.
Given the sector’s strategic importance, both speakers stressed the value of coordinated branding efforts involving government agencies and industry stakeholders. International roadshows, trade promotion initiatives, and dedicated representation in overseas markets could strengthen Bangladesh’s position as a preferred sourcing destination.
As the conversation drew to a close, Latifee asked Quamar Alam about his expectations from the country’s new leadership and the budget.
Alam’s response focused on two priorities. First, he called for making financing more accessible for entrepreneurs and manufacturers. Adequate capital availability, he argued, remains fundamental to sustaining investment and expansion.
Second, he emphasized the urgent need to reduce bureaucratic obstacles and improve the ease of doing business. Simplifying procedures, minimizing unnecessary delays, and eliminating administrative harassment would significantly improve Bangladesh’s investment climate.
Despite the numerous challenges facing the industry, Alam expressed optimism about the resilience of Bangladeshi entrepreneurs.
From the COVID-19 pandemic to global conflicts and economic downturns, the country’s business community has repeatedly demonstrated its ability to adapt and survive.
With supportive fiscal policies, improved access to finance, and a stronger commitment to innovation and competitiveness, Bangladesh’s textile and apparel industry may once again find the momentum needed to drive the nation’s economic growth.
As policymakers finalize the budget for the 2026–27 fiscal year, the message from industry leaders is clear: strategic support today could determine whether Bangladesh merely withstands future challenges or emerges stronger from them.
Textile Today Newsroom Episode Conceptualization: Enamul Hafiz Latifee, CRO, TTIH
