New Budget Priorities for Economic Development

A distinctive feature of this national budget is its pronounced emphasis on crucial areas such as education, healthcare, and social protection. The budget sets an ambitious growth target of 6.5% for the forthcoming fiscal year. Complementing this, ten critical priorities have been clearly outlined. These include fostering investment-driven employment generation, cultivating a production-oriented economy, pursuing deregulation, ensuring financial sector stability, and securing energy reliability. The BGMEA regards these measures as highly significant and supportive for the nation’s industrial expansion, trade growth, and, crucially, for facilitating a smooth graduation from the least developed countries (LDC) category. This holistic approach underpins the broader economic development goals.

Apparel Sector Faces Headwinds

The announcement of the new national budget coincides with an urgent BGMEA meeting convened to address a “persistent decline” in garment exports. The Apparel sector, a cornerstone of the Bangladesh economy, has been contending with a global economic slowdown and escalating domestic operational costs. This combination of factors has led to a 3.41% decrease in apparel export earnings, a 1.55% drop in average unit prices, and a 7.93% reduction in the opening of back-to-back Letters of Credit (LCs) for raw material imports during the current fiscal year. Consequently, approximately 400 factories within the Apparel sector have ceased operations over the past three years, highlighting significant challenges.

BGMEA Calls for Critical Policy Support

While the reform-oriented announcements within the Bangladesh Budget Economic Shift are generally seen as beneficial for industries, the BGMEA stresses that the current difficulties faced by the Apparel sector necessitate specific policy support measures. These measures are deemed essential to safeguard the industry’s competitiveness, given its pivotal role as a primary source of employment and foreign exchange earnings for the nation.

The BGMEA has put forth several BGMEA recommendations it hopes will be incorporated into the budget to mitigate the ongoing crisis in the Apparel sector. These include a reduction in withholding tax, a decrease in income tax applied to cash incentives, ensuring a reasonable corporate tax rate, eliminating double taxation in the sub-contracting process, and reducing import duties on man-made fibre-based apparel inputs.

In a formal statement, the organization underscored its belief that “the apparel sector is not only the country’s leading foreign exchange-earning sector but also a major driver of employment generation for millions of people.” To maintain international market competitiveness post-LDC graduation, the BGMEA emphasizes the necessity of reducing business costs, guaranteeing an uninterrupted and affordable supply of gas and electricity, and further streamlining customs and port-related procedures. This aligns with their prior plea in April for government intervention to resolve an ongoing gas and electricity crisis impacting the Apparel sector, as the energy challenges have driven up raw material prices and transportation costs, thereby increasing overall production expenses. These BGMEA recommendations are crucial for sustained economic development.

Conducted by Textile Exchange and SCS Consulting Services, this comprehensive LCA data initiative was prompted by persistent voids in environmental reporting, particularly regarding thermomechanical and chemical polyester recycling, and virgin polyester production in Asia. Asia currently accounts for over half of global polyester output. These new findings are designed to enhance the reliability of LCA assessments for various polyester pathways, building upon an earlier SCS study initially conducted for the UN Fashion Industry Charter that highlighted these critical data deficiencies.

Key Polyester LCA Data Insights Emerge

The study offers critical Polyester LCA Data Insights, highlighting several key areas that impact textile sustainability:

Energy Mix Significantly Alters Climate Impact

The analysis revealed that transitioning to a renewable energy mix can “substantially reduce” polyester’s climate impact. Conversely, reliance on coal-intensive energy grids was shown to significantly increase this environmental impact, underscoring the vital role of energy sourcing in advancing textile sustainability within the manufacturing process.

Diverse Approaches Needed for Recycling

The research indicates that no single recycling method provides a universal solution. Thermomechanical recycling is generally less resource-intensive but requires clean, high-quality material inputs. Chemical recycling, while capable of processing more complex waste streams, demands greater energy and chemical resources. Scaling circularity within the industry will necessitate a multi-faceted approach, combining various technologies for recycled polyester production.

Overcoming Post-Consumer Sorting Challenges

A major hurdle identified in post-consumer recycled polyester efforts is the limitation imposed by sorting processes. The report emphasizes the need for improved sorting and preprocessing across the entire value chain. It notes that commercial-scale chemical recycling predominantly focuses on post-industrial waste due to the complex sorting and logistical challenges associated with post-consumer materials.

Transportation’s Role in Environmental Performance

The study found that the distances involved in collecting textile waste can meaningfully influence overall environmental performance. This suggests that local sourcing of materials offers a practical strategy for reducing negative environmental impact and enhancing supply chain efficiency.

Filling Critical Data Gaps with New Public Information

Crucially, the study delivers new publicly available LCA data on virgin polyester produced in Southeast Asia, as well as recycled polyester production originating from China, Europe, and the US. It also marks the first known publicly available primary data for virgin polyethylene terephthalate (PET) production in Asia, encompassing melt, chip, and staple fiber from Southeast Asia, providing invaluable benchmarks for future sustainability assessments.

Beth Jensen, Chief Impact Officer at Textile Exchange, commented on the significance of the research, stating, “We are pleased to have worked with SCS Consulting Services on this LCA study, which marks a significant update to existing polyester LCA data and advances our understanding of the impacts of its production for the fashion, textile, and apparel industry. By addressing known data gaps across both virgin and recycled polyester, and by identifying major hotspot impact areas, these findings create a stronger foundation for making informed decisions that support the shift toward preferred production systems.”

The research was conducted in strict adherence to ISO 14044 standards and complied with the requirements of the Higg Materials Sustainability Index. Primary data collection occurred between 2022 and 2024 from seven facilities, including three chemical recycling operations, three thermomechanical recycling operations, and one virgin PET producer. This rigorous approach ensures the integrity and reliability of the new environmental impact insights.

The report, which spans a wide array of goods including apparel, footwear, and textiles, proposes the application of tariffs on products from the investigated economies. Key apparel and textile manufacturing hubs such as China, Vietnam, Bangladesh, and India are among the nations targeted. Hess emphasizes the importance of carefully managing the resulting cost pressures throughout global supply chains, noting that these restrictive trade measures often push financial burdens downstream, where they are most acutely felt by suppliers and their workforces. For many suppliers already operating on very tight margins, any additional costs could severely increase their vulnerability.

Navigating Supply Chain Vulnerabilities

Cascale’s data, collected through Better Buying, consistently reveals that periods of commercial uncertainty and financial strain exacerbate operational challenges within the apparel supply chain. Suppliers frequently report heightened difficulties with planning stability, absorbing costs, managing production changes, and coping with order volatility. As these pressures intensify, the risks associated with excessive overtime, unauthorized subcontracting, and other critical labor-rights concerns also tend to rise. The potential Forced Labor Trade Impact underscores the urgency for brands and retailers to address these vulnerabilities proactively.

In response to these emerging risks, Cascale advocates for proactive strategies focused on forward planning, fair terms, and consistent communication with suppliers. Hess stresses that these fundamentals become even more crucial during times of disruption. By adopting responsible purchasing practices, companies can empower their suppliers to navigate uncertainty, maintain stable operations, and continue supporting their workers.

While individual companies may have limited control over broad trade policy changes, their purchasing decisions are entirely within their purview. At a time marked by heightened uncertainty, feedback from suppliers consistently points to a clear need for greater predictability, stronger communication, and commercial practices that enable effective planning. These are the foundational conditions that not only help build robust supplier resilience but also support sustained business performance and ensure worker wellbeing across the apparel supply chain. Brands and retailers committed to ethical practices can significantly mitigate the negative repercussions of new trade measures by prioritizing such responsible purchasing strategies.

Manufacturing Sector Gains Ground on Textiles and Higher Working Days

The growth in new orders and production was largely fueled by the textiles and apparel industry, according to the Sri Lanka PMI May 2026 data. New orders climbed sharply to 52.6 from 36.4 in April, while production rose to 54.6 from 30.5, reflecting a decisive swing back into expansion territory. Employment in the manufacturing sector also improved significantly, moving to 59.7 from 47.0, a clear sign of stronger factory-level activity across the country.

Stock of purchases increased to 52.6 from 44, supported by rising demand and growing production requirements. Manufacturers attributed a portion of this improvement to a higher number of working days in May compared with the previous month, which gave factories more room to ramp up output and fulfill pending orders.

Supply Chain Delays Persist

Despite the positive momentum in manufacturing expansion, supplier delivery times remained extended. The delivery times index stood at 66.3, indicating that supply chain delays continued to be a challenge for manufacturers. Businesses also highlighted that the difficult operating environment linked to the ongoing Middle East conflict kept affecting both operations and overall sentiment within the sector.

Services Sector Growth Led by Financial and Professional Services

The Sri Lanka PMI for services recorded an index value of 56.9 in May 2026, signaling a clear expansion in services activities compared with the previous month. The services sector growth was primarily driven by stronger performance in financial services, professional services and other personal services.

New business volumes increased across the sector, with financial and professional services leading the way. Wholesale and retail trade, personal services and goods transportation also contributed positively to the overall expansion. However, employment in the services sector declined during the month due to contract expirations, retirements and resignations. Backlogs of work also continued to fall, and at a faster pace than recorded in April.

Outlook Remains Optimistic Despite Global Risks

Looking ahead, businesses in both the manufacturing and services sectors remain optimistic about activity over the next three months. Manufacturing firms expect operations to stay above the neutral threshold, while service providers anticipate stronger demand supported by higher tourist arrivals during the Perahera season and improving domestic economic conditions.

The Central Bank noted, however, that risks associated with the Middle East conflict and broader global uncertainties continue to weigh on business confidence. These factors could affect future growth prospects for both sectors, even as the near-term indicators remain encouraging. The Sri Lanka PMI May 2026 readings suggest resilience in the economy, though external headwinds demand cautious optimism from businesses and policymakers alike.

The divergence points to shoppers becoming more deliberate about what they buy in categories viewed as non-essential, with fashion among the most exposed. While other discretionary segments also cooled, the declines were smaller than in apparel. Shipments in cosmetics, food and drink, toys and gifting slipped by between 5% and 8%, according to the data.

By contrast, categories linked to the home and everyday lifestyle showed strong gains, suggesting spending is being redirected rather than disappearing. Homewares shipments rose 23%, while tool and DIY deliveries increased 19%. Pet and animal products grew 17%, and sports equipment shipments were up 14%, reinforcing a picture of consumers prioritising home improvement, wellbeing and practical purchases as summer approaches.

At the same time, Scurri’s findings highlight a second shift: shoppers may be buying less fashion, but they are raising the bar for delivery. Next-day delivery usage rose 29% compared with the same period last year, making it an increasingly dominant choice at checkout. Standard delivery lost ground, with the proportion of customers selecting it falling by 2.7%. Signature-required services also gained momentum, increasing by nearly 13%.

Scurri chief marketing officer Gavin Murphy said the combination of tighter purchasing and higher delivery expectations reflects a more nuanced consumer mindset. “These figures point to an interesting shift in consumer behaviour. Consumers remain cost-conscious and are carefully considering their purchases. However, once they’ve decided to buy, they increasingly want the confidence that comes from a fast, convenient and reliable delivery experience.”

Scurri said next-day delivery now represents more than 31% of preferred shipping selections, making it the leading premium option. Signature services account for a further 23%, indicating that speed and reassurance are becoming part of the perceived value of an online purchase.

The data suggests that, even under ongoing economic pressure, consumers are less inclined to compromise on fulfilment quality. Retailers that assume shoppers will always trade down to the cheapest shipping option may be misreading the moment, Murphy argued. “Retailers often assume that economic pressure means shoppers will always choose the cheapest delivery option available. Our data suggests the opposite. Delivery has become part of the product experience. Consumers may be buying fewer items, but they are increasingly willing to invest in services that help them receive those purchases more quickly and with greater confidence.”

Scurri also recorded a sharper drop in international parcel flows than in domestic shipments. Overseas deliveries from the UK fell by almost 26% year on year, suggesting consumers are approaching cross-border purchasing with more caution, potentially influenced by higher delivery charges and fulfilment complexity.

With fashion shipments fell 22% while home and lifestyle categories advanced, Scurri’s snapshot suggests UK ecommerce is not slowing so much as shifting. The message for retailers, Murphy said, is that delivery is increasingly tied to loyalty and repeat purchasing. “As competition intensifies, retailers need to recognise that delivery is no longer simply an operational function. It’s a customer experience channel and a loyalty driver. The retailers that give consumers the right balance of speed, convenience and flexibility will be best placed to win repeat business,” he concluded.

The Ecoini Clothing and Leather Council has highlighted a critical reliance on foreign nationals within the sector, reporting that over 80% of machinists are foreign workers. This reliance underscores a long-standing challenge for factories, which have consistently struggled to recruit a sufficient number of skilled local workers to fill these essential roles. The potential sudden departure of these foreign workers, driven by stricter immigration enforcement, could precipitate a severe labor shortage, directly impacting production capacity.

Industry stakeholders express deep concern that such a rapid exodus would inevitably lead to reduced output, factory closures, and significant job losses across the Durban clothing industry. The ripple effect of these closures would not only devastate the livelihoods of many but also inflict substantial damage on the broader local economy. The concerns revolve around maintaining stability for Durban clothing industry jobs and the entire textile industry.

In response, the KwaZulu-Natal government has maintained its firm stance, emphasizing that all businesses operating within the province must adhere strictly to existing immigration and labor laws. The government reiterated that the employment of undocumented foreign nationals is illegal and compliance is non-negotiable.

This critical situation has ignited a pertinent debate: whether South Africa should proceed with immediate, rigorous immigration enforcement or implement a phased transition plan designed to safeguard both existing Durban clothing businesses and the numerous job losses that loom. The outcome of this discussion will profoundly shape the future of the region’s manufacturing sector and the stability of its textile industry. The council insists that a balanced approach is necessary to navigate the complexities of immigration enforcement without sacrificing essential foreign workers and ultimately impacting the sustainability of Durban clothing industry jobs.

Elevating Cameroon’s Textile Value Chain

During a pivotal meeting with CETTEX Director General El Mohsen Missaoui, both institutions thoroughly examined a spectrum of cooperation opportunities. These encompass vital areas such as advanced textile manufacturing, technology transfer, innovation, stringent quality control measures, specialized training programs, and comprehensive support for small and medium-sized enterprises (SMEs), all crucial for robust industrial development.

CAPEF underscored that the primary focus of these discussions is to fortify Cameroon’s cotton value chain. Despite the nation’s impressive annual production of over 300,000 tonnes of cotton, a significant portion is currently exported in raw form, largely due to existing limitations in domestic processing capacity. The overarching objective is to cultivate an integrated value chain that seamlessly spans from initial cotton production to spinning, weaving, garment manufacturing, and the ultimate marketing of sophisticated finished textile products. This initiative is closely aligned with Cameroon’s broader industrialisation strategy, designed to empower local producers to fully leverage the extensive opportunities presented by the African Continental Free Trade Area (AfCFTA). The pursuit of enhanced cotton processing and manufacturing is a cornerstone of this national vision.

Blueprint for Industrial Collaboration

CETTEX showcased Tunisia’s successful textile development model, which is fundamentally built on strategic investments in cutting-edge technology, continuous innovation, rigorous skills development, and robust industrial support services. The dialogue explored how key facets of this established experience could effectively underpin the burgeoning textile industry growth in Cameroon.

CAPEF further identified several promising avenues for collaboration. These include specialized production of professional workwear, the manufacture of distinct printed fabrics tailored for diverse African markets, targeted training initiatives for skilled artisans and processing SMEs, and engaging in triangular cooperation projects that involve established European and international partners. These efforts are integral to fostering holistic industrial development. The initiative significantly supports national endeavors to enhance local value addition across agriculture-based sectors, a core tenet of Cameroon’s National Development Strategy (NDS30). Recent data from the Ministry of Agriculture and Rural Development and SODECOTON confirms that national cotton production has consistently remained above 300,000 tonnes in recent years, highlighting the untapped potential for the Cameroon textile sector.

Forging Future Partnerships

Concluding the productive engagement, CAPEF and CETTEX mutually agreed to establish a dedicated technical working group. This group will be tasked with meticulously preparing a structured cooperation programme, a proposal that will subsequently be presented to both Cameroonian and Tunisian authorities through established bilateral cooperation mechanisms, paving the way for concrete implementation.

According to local outlet Tanzania Insight, the two countries recently convened a three-day conference that brought together government representatives and industry stakeholders to map out next steps for tackling child labour risks in the cotton sector. Discussions focused on strengthening working conditions, improving safety standards and expanding the social protection mechanisms that can help vulnerable households rely less on children’s labour.

Speaking at the event, ILO national project coordinator Glory Blasio said the programme is intended to create safer workplaces, raise occupational health standards and reinforce social protection systems—measures that, taken together, are expected to reduce the likelihood of children entering farm work.

Blasio also pointed to household economics as a key driver in cotton-producing areas, where limited income can make children’s work feel like a necessity rather than a choice. She noted that financial hardship remains among the strongest underlying factors contributing to child labour in cotton, as some families depend on additional labour to stabilise earnings during peak farm seasons.

Cotton remains a critical crop for Tanzania, particularly in regions such as Simiyu, where it supports the livelihoods of thousands of smallholder farmers. But the labour demands of planting, weeding and harvesting have long created an elevated risk of child involvement, especially when families lack access to hired labour, mechanised tools or adequate social support.

Conference participants emphasised that progress will require coordination across multiple levels—government agencies, international partners and community leadership—to address root causes rather than only symptoms. Several speakers also highlighted the role of agricultural modernisation in reducing the dependence on manual labour.

Frank Kilimba, assistant director of social protection at Tanzania’s Prime Minister’s Office responsible for Labour, Youth, Employment and Persons with Disabilities, argued that technology and mechanisation can help shift the economics of cotton farming. By reducing the need for labour-intensive manual tasks, he said, modern practices can help raise productivity while lowering the pressure on families to supply extra hands from within the household.

Kilimba suggested that broader uptake of mechanised equipment and improved farming systems could reduce reliance on family labour and strengthen efforts to keep children in school, particularly during periods when farms traditionally need more workers.

Government officials also stressed the importance of community engagement and education campaigns, noting that changing practices requires sustained awareness-building in cotton-growing areas. Hadija Hensi, Simiyu regional labour officer, said ongoing outreach continues to promote schooling and remind communities of the legal framework: Tanzanian law prohibits the employment of children under 14.

Brazil’s involvement is viewed as strategically useful because of the country’s experience addressing child labour challenges in agriculture, including cotton. Officials said that knowledge-sharing and practical lessons from Brazil can help inform Tanzania’s approach as it adapts interventions to local realities.

The Cotton Wealth Decent Work project is part of wider international pressure to improve labour standards in cotton supply chains, as brands and consumers demand stronger safeguards and traceability. Tanzania Insight reported that the conference reflected a growing recognition that eliminating child labour will require a combined approach—stronger enforcement, economic support for vulnerable families, better access to education and sustained investment in farm modernisation.

Pioneering Collaboration Fuels Sustainable Textile Production

U.S.-based Panda Biotech has announced a pivotal collaboration with India’s Culturewell Trading LLP. This alliance is designed to introduce high-quality hemp fiber from the United States directly into India’s textile supply chain. The initiative addresses a growing international imperative for sustainable, traceable, and certified raw materials in textile production. This move marks a noteworthy expansion for US hemp exports into a crucial Asian market.

The Indian domestic textile and apparel market, valued between $174 billion and $200 billion as of 2025–2026 financial data, is projected to surge to $350 billion by 2030. This substantial growth trajectory comes with increasing pressure on India’s textile sector to integrate greener inputs and embrace more environmentally responsible practices. By comparison, the domestic output from U.S. textile mills stands at approximately $46 billion.

This agreement not only cultivates a new market for U.S. industrial hemp producers but also facilitates a greater role for sustainable hemp fiber in global textile manufacturing. The demand for eco-friendly and sustainable products is a powerful driver in the global industrial hemp market, which is experiencing rapid growth. Industry forecasts indicate the global industrial hemp market could reach upwards of $30.24 billion by 2029.

Ensuring Quality and Trust in Global Trade

The hemp fiber slated for shipment under this new agreement will carry both OEKO-TEX STANDARD 100 and USDA BioPreferred certifications. These certifications are critical for building confidence among manufacturers and global buyers, ensuring the materials meet stringent environmental and safety standards. Such assurances are vital as the global trade of industrial hemp continues to navigate complex regulatory landscapes and consumer expectations for transparency and sustainability. This commitment to certified quality reinforces the position of US hemp exports as a reliable source for premium raw materials.

This strategic entry into the Indian market through the US Hemp Global Textile Trade partnership is poised to support India’s shift toward more sustainable textiles while opening significant avenues for American agricultural output on the international stage.

Understanding that shared foundation explains why the two sectors lean on the same suppliers, and why precision manufacturing is one of the threads that ties modern industry together.

Textile machinery runs on machined metal

A modern mill is full of precision components. Spinning frames, looms, knitting machines, and finishing lines all depend on rollers, gears, bearings, cams, and shafts that have to be made accurately and hold up to constant running. A roller that is even slightly out of round leaves marks in the fabric. A gear cut to a loose tolerance wears fast and throws off timing across the line.

These are not parts a mill can buy generically. Many are specific to a machine, sometimes to a single installation, and when one wears out or a line is upgraded, it has to be reproduced precisely. That is machining work, the same discipline that supplies any other precision industry.

The automotive parallel

Vehicle manufacturing runs on the same kind of parts, only the names change. Housings, brackets, fittings, and drivetrain components all have to be machined to tight tolerances and produced consistently, in prototype quantities during development and in larger runs for production. The tolerances, the materials, and the quality systems behind them mirror what a textile plant needs from its own components.

Because the underlying capability is the same, a shop equipped to serve one sector is usually equipped to serve the other. A facility making precision parts for spinning and weaving plants is, in practice, also able to deliver the components a car maker or its suppliers require.

Why cross-industry suppliers matter

This overlap is good news for buyers in both sectors. A precision manufacturer that already supplies textile machinery components can apply the same equipment, tolerances, and quality controls to automotive industry solutions for OEM and aftermarket customers. The investment in machine tools, inspection, and process control serves more than one market, which keeps that capability viable and available.

For procurement teams, it widens the field of capable suppliers and reduces dependence on any single niche vendor. A part that is hard to source from a textile-only specialist may be straightforward for a precision shop that works across industries, because the core competence, holding tight tolerances repeatably in metal, transfers cleanly from one application to the next.

Shared standards, shared discipline

What really connects these sectors is not the parts themselves but the discipline behind them. Consistent tolerances, verified inspection, traceable materials, and reliable lead times matter as much to a mill keeping a line running as to a manufacturer keeping an assembly schedule. A supplier that meets those standards for one industry has already built what the other needs.

The takeaway

Textiles and automotive may sit far apart on the surface, but both rest on the same base of precision-machined components. The roller in a loom and the housing in a vehicle come from the same kind of shop, held to the same kind of standard. Seeing that shared foundation makes the supply chain easier to understand, and it points buyers in either industry toward the precision manufacturers who can serve them both.