What do the election results mean for Bangladesh’s garment and textile sector?

Following the unprecedented unrest of late 2024 and the subsequent interim administration, Bangladesh voted last Thursday and declared results on Friday: The BNP-led alliance won 209 seats and the Jamaat-led bloc secured 68 in the 297 constituencies for which results were declared. For the ready-made garment (RMG) sector—the very heartbeat of the nation’s economy that accounts for over 80 percent of total export earnings—, the return to a democratically elected government represents a fragile bridge back to stability.

Garment workers have returned to their respective workplaces after the government declared a four-day holiday so that citizens could go to their native places and vote. However, the initial sense of relief at the relative calm in the aftermath of the vote has quickly given way to a more urgent articulation of economic aspirations. Wish lists are currently being drawn up with urgency by industry leaders hoping for clear action in the first 100 days.

Search for stability

The political vacuum created after the ousting of the previous regime left a scar on the 2024–2025 fiscal performance with many feeling the industry was entering its most perilous chapter. This sentiment was echoed by Mohiuddin Rubel, additional managing director at Denim Expert Ltd, who supplies to big brands like H&M. “The industry is in a critical condition, and if steps are not taken now, it can be worse,” he warned according to Reuters.

The primary challenge since the mid-2024 uprising has been the “unpredictability” of the market. Global buyers, who value lead times and security above all else, began looking at “Bangladesh Plus One" strategies as factory closures and internet blackouts disrupted the flow of goods. For the owner-operators on the ground, the financial toll has been personal and profound. The transition period between the interim government and the recent elections saw some of the most difficult trading conditions in living memory.

Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and owner of three factories, highlighted the volatility by noting that “there is no stability.” “Some months we get small orders, other months big orders, because the market is so unpredictable,” he lamented according to Reuters.

Ehsan further revealed that 2025 was the first time in his two decades in business that he had lost money—“equivalent to two to three years of profits”—illustrating that even the resilience built during the pandemic was pushed to breaking point.

Restoring buyer confidence

The successful conclusion of the elections is now being viewed as the necessary “reboot” for international relations. Buyers from the UK, EU and US have been hesitant to commit to long-term contracts without a clear legislative partner to address wage structures and energy costs. The new government’s first task will be to convince these global brands that the “Made in Bangladesh” label is once again backed by a stable, secure environment.

The dip in exports was not merely a seasonal fluctuation but a direct result of political paralysis. “This unstable situation has meant that exports have dipped… it has never been so bad before,”confirmed Md. Shehab Udduza Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in the same article. His assessment underlines the industry's relief that a formal government is finally in place to stem the tide of cancelled orders.

Navigating global trade headwinds

While domestic politics has been the focus, the global stage remains unforgiving. The emergence of new trade deals between major competitors and the EU and US has added pressure on Bangladesh to maintain its competitive edge. The industry is currently banking on reciprocal tariff agreements to offset rising production costs. The hope is that a legitimate, elected government will have the mandate to negotiate these crucial international treaties effectively.

For Faisal Samad, BGMEA director and managing director of Surma Garments Ltd., which supplies to international brands like Reebok and Primark, the intersection of diplomacy and democracy is the key to recovery. “The 0 precent reciprocal tariff offer, along with the fact that we will soon have an elected government, means that things could improve for the ready-made garments industry,” he said earlier in February according to Reuters. This optimism is rooted in the belief that an elected body can provide the “long-term policy stability” that factory owners have been pleading for.

The road to structural reform

Looking ahead, the industry must move beyond mere survival and address the volatile mix of energy shortages and labour demands that have plagued the sector. The new administration inherits a sector where roughly 400 factories have shuttered over the last year. The focus must now shift toward sustainable growth, diversifying the product range and ensuring that the minimum wage mechanisms are both fair to workers and viable for manufacturers.

The following summary outlines the five key pillars of the proposed textile policies and how they directly address (or, in some cases, conflict with) the concerns of industry insiders.

1. US-Bangladesh Trade Deal (Feb 2026)

One of the most significant “early wins” for the new administration is the zero-tariff corridor negotiated with the United States. Finalised on 9th February 2026, the deal caps reciprocal tariffs at 19 percent (down from as high as 37 percent during 2025) and grants duty-free access for garments produced using US cotton or man-made fibres.

While this directly addresses the Trump tariffs, the “US-input” requirement remains a hurdle, as manufacturers must now recalibrate their supply chains away from traditional regional sources to qualify for the benefit.

2. Energy security and subsidy rationalisation

The FY2025–26 budget reflects a strategic pivot in energy management. While total power sector allocations were slashed by 30 percent, the budget for energy security received a 100 percent boost. The government is moving toward a “reliability first” model, attempting to end the 3-4 hour daily load-shedding that has crippled factory productivity.

Insiders like the Bangladesh Garment Buying House Association’s (BGBA) Mohammed Zakir Hossain have warned that energy costs and outages are “eroding global confidence.” The policy of fixing energy prices for a defined period—a key demand from the BGMEA—is currently under review to provide the price predictability factory owners crave.

3. Yarn import duty standoff

The proposed duty on yarn imports remains a point of friction. The government has toyed with the idea of curbing duty-free yarn imports under bond licences to protect domestic spinning mills, which currently face massive inventories and idle capacity.

Both BGMEA and BKMEA have labelled the proposal as “suicidal,” arguing that it would add over 2 billion US dollars in annual costs. The new government is thus caught between the Bangladesh Textile Mills Association (BTMA) and garment exporters, with a middle path involving cash incentives for spinners likely to be the eventual compromise.

4. LDC graduation and GSP+ preparedness

With Bangladesh set to graduate from Least Developed Country (LDC) status in November 2026, the new government is fast-tracking labour reforms to qualify for the EU’s GSP+ scheme. Policies include shortening the wage review cycle and establishing a sustainable wage mechanism to prevent the recurring unrest seen in late 2024.

Factory owners are wary though of the financial strain that these reforms may bring. The government’s challenge is to ensure that “take-off” does not turn into “stall” by imposing too much regulatory cost too quickly.

5. Diversification and backward linkages

Both major political parties have pledged to move the needle on product diversification, particularly into man-made fibres (MMF) and high-value technical textiles. The 2026 policy framework includes a 1 percent reduction in supplementary duties on certain laminated fabrics to encourage the production of sportswear and outerwear. By incentivising MMF, the government is helping the industry escape a price compression trap where it ships more volume for less profit (like basic cotton t-shirts, etc.).

To industry insiders, it is clear that the election was not the finish line, but the starting gun as the sector is seeking urgent financial and policy support to navigate the next two quarters. As the BGMEA leadership recently emphasised during emergency meetings with the finance division, the sector faces “a severe crisis amid weakening global demand and rising domestic costs” according to Textile Insights. Thus, the coming months will determine if the new political landscape can truly safeguard the nation's economic lifeblood.