Textile Associations Propose 370 Distressed Factories for Government Financial Aid

Three of Bangladesh's principal textile and apparel trade bodies have forwarded 370 closed and struggling factories to the Bangladesh Bank for consideration under the government's Tk 60,000 crore stimulus package, according to The Daily Star. The recommendations, split among BGMEA, BTMA and BKMEA, cover more than half of an estimated 700 distressed units that have accumulated over two years of political turbulence, labour unrest and operational breakdowns since mid-2024.

Anatomy of the package

The central bank's refinancing scheme, unveiled on 23 May, rests on a composite funding structure: Tk 41,000 crore sourced from banks holding excess liquidity against deposits of at least three years at a 10 percent interest rate, paired with Tk 19,000 crore drawn from the central bank's own resources under a government guarantee. Within the Tk 60,000 crore envelope, Tk 20,000 crore has been earmarked specifically for closed factories, Tk 10,000 crore for agriculture and rural activities, Tk 5,000 crore for cottage, micro, small and medium enterprises, and Tk 3,000 crore each for export diversification and the North Bengal Agricultural Hub.

Factories cleared by the three associations may apply through their lien banks, which will channel the requests to the Bangladesh Bank. BGMEA has put forward 140 garment factories, BTMA has recommended 130 textile, spinning, weaving, dyeing, finishing and printing mills, and BKMEA has submitted 100. All recommendations passed third-party audit, per BGMEA President Mahmud Hasan Khan.

Eligibility friction

The fund's reach, however, is constrained by its own statutory framework. BTMA President Showkat Aziz Russell has cautioned that stringent conditions — notably the treatment of classified loans — could exclude many applicants from the facility. The stimulus is also layered onto a sector still absorbing the structural shocks of 2024: the July Uprising, the August collapse of the Sheikh Hasina administration, and subsequent labour unrest across Savar, Ashulia, Gazipur, Narayanganj and Bhaluka — districts that account for over 60 percent of national textile and garment capacity. Fires at factories and goods-laden trucks bound for Chattogram disrupted supply chains, forcing exporters to discount heavily, rely on air freight and absorb order cancellations.

Compounding these domestic disruptions, exporters cite a prolonged energy crisis and supply-chain frictions linked to the wars involving Russia and Iran. Russell noted that without adequate gas and electricity supply, the stimulus alone will not restart idle capacity.

Forward indicators

With disbursement conditional on third-party-verified lists and bank-level due diligence, the first round of approvals will reveal how strictly the Bangladesh Bank interprets its classified-loan threshold. Parallel capital flows are worth tracking: BGMEA's newly announced partnership with the Overseas Chinese Association in Bangladesh to court Chinese investment through joint ventures and technology transfers, and a forthcoming delegation of 25 US firms reported by The Business Standard as exploring opportunities in the country. Whether these channels, alongside the stimulus, stabilise a sector that retains its second-place ranking in global garment exports will define the sector's near-term trajectory.