What do the election results mean for the clothing and textile sector?

After the unprecedented unrest at the end of 2024 and the interim government that followed, Bangladesh elected a new government last Thursday. The results were announced on Friday, February 13, 2026: the BNP-led alliance won 209 seats and the Jamaat-led bloc secured 68 of the 297 constituencies for which results were available. For the ready-to-wear sector (RMG), the heart of the national economy, which accounts for over 80 percent of total export revenue, the return to a democratically elected government represents a first bridge back to stability.

Garment workers returned to their jobs after the government declared a four-day holiday to allow citizens to travel to their hometowns and vote. However, initial relief at the relative calm following the election has quickly given way to a more urgent expression of economic hope. Industry leaders are currently quickly creating wish lists and hoping for clear measures in the first 100 days.

Search for stability

The political vacuum following the fall of the previous regime left its mark on the 2024-2025 budget performance. Many felt the industry was entering its most dangerous chapter. This sentiment was shared by Mohiuddin Rubel, additional managing director at Denim Expert Ltd, which supplies major brands such as H&M. “The industry is in a critical condition. If action is not taken now, things can get even worse,” he warned, according to Reuters.

The biggest challenge since the uprising in mid-2024 has been the “unpredictability” of the market. Global buyers, who value delivery times and security above all, started looking for “Bangladesh Plus One” strategies. This happened as factory closures and internet outages disrupted the flow of goods. For the local owners and operators, the financial burden was personal and profound. The transition period between the interim government and the recent elections brought some of the most difficult trading conditions in living memory.

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

Ehsan further revealed that in 2025 he lost money for the first time in his two decades in the business. The loss was equivalent to “two to three years’ worth of gains.” This shows that even the resilience built during the pandemic reached its limits.

Restore buyers’ trust

The successful conclusion of the elections is now seen as a necessary “reset” for international relations. Buyers from the UK, EU and US were reluctant to sign long-term contracts. They lacked a clear legislative partner to regulate wage structures and energy costs. The first task of the new government will be to convince these global brands that the “Made in Bangladesh” label once again represents a stable and safe environment.

The decline in exports was not just a seasonal fluctuation, but a direct result of political paralysis. “This unstable situation has led to a decline in exports…it has never been this bad,” Md. Shehab Udduza Chowdhury, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), confirmed in the same article. His assessment underscores the industry’s relief that a formal government is finally in place to stem the wave of canceled orders.

Defying global trade winds

Although domestic politics have been the focus, the global stage remains unforgiving. New trade agreements between key competitors and the EU and US have increased pressure on Bangladesh to maintain its competitiveness. The industry is currently relying on mutual tariff agreements to offset rising production costs. The hope is that a legitimate, elected government will have the mandate to effectively negotiate these crucial international treaties.

For Faisal Samad, director of BGMEA and managing director of Surma Garments Ltd., which supplies international brands such as Reebok and Primark, combining diplomacy and democracy is the key to recovery. “The offer of a zero percent reciprocal tariff and the fact that we will soon have an elected government means that things could improve for the ready-to-wear industry,” he told Reuters in early February. This optimism is based on the belief that an elected body can provide the “long-term political stability” that factory owners demand.

Path to structural reform

Looking forward, the industry must move beyond mere survival and address the explosive mix of energy shortages and labor demands plaguing the sector. The new government inherits an industry in which around 400 factories closed last year. The focus must now shift to sustainable growth, diversifying the product range and ensuring fair minimum wage mechanisms that are sustainable for manufacturers.

The following summary outlines the five main pillars of the proposed textile policy. She shows how these directly address the concerns of industry insiders or, in some cases, conflict with them.

1. US-Bangladesh Trade Agreement (Feb 2026)

One of the most significant “early successes” for the new government is the tariff-free corridor negotiated with the US. The agreement, concluded on February 9, 2026, limits reciprocal tariffs to 19 percent. Previously they were up to 37 percent in 2025. It also provides tariff exemption for clothing made from U.S. cotton or man-made fibers.

While this directly addresses the Trump tariffs, the “US input” requirement remains a hurdle. Manufacturers must now realign their supply chains and move away from traditional regional sources to reap the benefits.

2. Energy security and subsidy rationalization

The fiscal year 2025-26 budget reflects a strategic shift in energy management. While overall funding for the power sector was cut by 30 percent, the energy security budget received a 100 percent increase. The government is moving towards a “reliability first” model. It is trying to end three- to four-hour daily power shutdowns that have crippled factory productivity.

Insiders like Mohammed Zakir Hossain of the Bangladesh Garment Buying House Association (BGBA) have warned that energy costs and outages are “undermining global confidence.” The policy of setting energy prices for a specific period, a key demand of the BGMEA, is currently under review. It is intended to create the price predictability desired by factory owners.

3. Standstill on yarn import tax

The proposed tariff on yarn imports remains a point of friction. The government has toyed with the idea of ​​restricting duty-free yarn imports under bonded licenses. This is intended to protect domestic spinning mills, which are currently struggling with massive inventories and unused capacity.

Both the BGMEA and BKMEA have described the proposal as “suicidal”. They argue it would cost more than $2 billion annually. The new government thus finds itself in a quandary between the Bangladesh Textile Mills Association (BTMA) and the garment exporters. A middle ground with financial incentives for spinning mills is the likely compromise.

4. LDC Graduation and APS+ Preparation

Bangladesh will move away from Least Developed Country (LDC) status in November 2026. Therefore, the new government is accelerating labor reforms to qualify for the EU’s GSP+ system. The measures include shortening the wage review cycle and establishing a sustainable wage mechanism. This is intended to prevent recurring unrest like the one at the end of 2024.

However, factory owners are concerned about the financial burden these reforms could bring. The challenge for the government is to ensure that the “recovery” does not become a “standstill” by imposing too high regulatory costs too quickly.

5. Diversification and backward integration

Both major political parties have pledged to advance product diversification. This applies in particular to man-made fibers (MMF) and high-quality technical textiles. The policy framework for 2026 includes a one percent reduction in additional tariffs on certain laminated fabrics. The aim is to promote the production of sports and outdoor clothing. By promoting MMF, the government is helping the industry escape a price pressure trap in which it delivers more volume for less profit, such as in plain cotton T-shirts.

It is clear to industry insiders that the election was not the finish line, but the starting signal. The sector is urgently seeking financial and policy support to navigate the next two quarters. BGMEA leadership stressed in recent emergency meetings with the finance department that the sector was facing “a severe crisis amid weakening global demand and rising domestic costs,” according to Textile Insights. The coming months will show whether the new political landscape can really secure the country’s economic lifeline.