Bangladesh’s garment industry is experiencing a significant downturn, leading to widespread factory closures and mass layoffs that threaten a sector vital to the country’s economy. In a recent development, Lithe Garments, a major manufacturer in Gazipur, laid off 3,000 workers at once, including Mosammat Aklima, who received notice of her redundancy via text message. Aklima, who has worked in the factory for eight years and is currently three months pregnant, expressed uncertainty about her future employment prospects amid the industry slump.

This wave of job losses is part of a broader contraction affecting Bangladesh’s garment sector, which accounts for approximately 80 percent of the nation’s export revenue. Over the past two years, around 400 of the country’s 4,000 apparel factories have shut down, resulting in tens of thousands of lost jobs. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) attributes many closures to declining exports amid intense regional competition from India and Vietnam, which have leveraged free-trade agreements to gain market share.

Industry experts highlight that while U.S. tariffs on apparel imports are relatively uniform across Asian exporters, Bangladesh faces tougher challenges in Europe, its largest market. The country’s preferential duty-free access to European markets, tied to its least-developed country status, is set to expire in 2029. Dhaka University professor Selim Raihan warned that without securing new free-trade agreements, Bangladesh risks losing competitive ground to its rivals.

Data from Eurostat indicates that European Union apparel imports have declined in the first five months of this year, with Bangladesh experiencing the steepest fall among major suppliers. Analysts partly attribute this to weakened consumer demand amid geopolitical tensions, including conflicts in Ukraine and the Middle East. Moreover, Bangladesh’s apparel industry is criticized for its continued reliance on low-margin products such as T-shirts and jeans, while competitors have diversified into higher-value and synthetic-fibre garments.

The sector also grapples with high production costs due to dependence on imported raw materials like cotton. Apparel Voice founder Mohiuddin Rubel emphasized that Bangladesh’s expansion has lacked strategic planning and infrastructure consolidation. He noted missed opportunities in niche markets such as military uniforms and medical apparel and pointed out the limited investment in research and innovation.

Further complicating the picture, a World Bank report highlights that most Bangladeshi factories still operate with semi-automated, labor-intensive systems, whereas countries like Vietnam are advancing toward highly automated manufacturing processes. While technological adoption may enhance productivity, labor advocates caution about potential job losses stemming from increased automation.

As Bangladesh’s garment industry navigates these challenges, more than 4.5 million workers—predominantly women—face an uncertain future amid factory closures and shifting global market dynamics. The sector’s trajectory will depend on its ability to modernize, diversify products, and negotiate favorable trade agreements to maintain its export competitiveness.