Exports to European Union countries grew by 1.3% to €2.69 billion, translating to an increase of €35.1 million year-on-year. Meanwhile, sales to markets outside the European Union rose by approximately 5% to €1.09 billion, adding €51.9 million. Despite the faster pace of growth in non-EU destinations, the EU continues to account for around 71% of Portugal textile exports in this period.

Non-Knitted Clothing Leads Product Category Growth

Breaking down the performance by product category, non-knitted clothing and clothing accessories recorded the strongest increase in absolute terms. Exports in this segment rose by 8.5%, adding €54.7 million to reach a total of €696.5 million.

Knitted clothing and clothing accessories, which remain the single largest export category for the Portuguese textile industry, grew by 1.3% to €1.46 billion — an increase of €19.3 million compared with the same period last year.

Among the other strong performers, impregnated, coated, covered, or laminated fabrics — which include products intended for technical applications — saw exports rise by 13.8% to €259.2 million, representing an additional €31.4 million. Wadding, felt, nonwovens, and cordage articles grew by 7.3% to €253.6 million. Carpets and other textile floor coverings recorded a 17.2% increase, reaching €76.4 million. Other made-up textile articles, a category that encompasses a significant share of home textiles, also performed positively, though more moderately, rising 2.1% to €518 million.

On the other side of the ledger, man-made staple fibres recorded the largest decline in absolute terms. Exports in this category fell by 26.4%, from €153.2 million in the first eight months of 2025 to €112.8 million — a reduction of €40.4 million. Man-made filaments also declined by 11.2% to €53.6 million. Other vegetable textile fibres fell by 16.2%, while cotton exports dropped by 4.6%.

France and the Netherlands Drive Export Market Gains

Among destination markets, Spain retained its position as the largest customer for Portugal textile and clothing exports, with purchases of €873.3 million — virtually unchanged from the €874.2 million recorded in the same period of 2025, representing a marginal decline of 0.1%.

France, the second-largest destination, posted the biggest absolute increase among key markets. Exports to France grew by 4.1%, equivalent to an additional €22.2 million, reaching a total of €559.2 million. Germany, in third place, recorded a decline of 2.6% to €307.1 million, €8.3 million below the prior-year figure.

The United States, ranked fourth, increased its purchases of Portuguese textiles and clothing by 3.1% to €300.9 million, an uplift of €9.1 million. The Netherlands stood out as another strong performer, with exports growing by 10.2% — an additional €21.3 million — to reach €230.1 million.

Italy registered the largest absolute decline among major destinations, with exports falling 11.1% to €191.6 million, a reduction of €23.9 million. Exports to the United Kingdom also fell by 2.6% to €221.6 million.

Among the remaining markets within the top ten destinations, Belgium grew by 9% to €109.8 million, Canada increased its purchases by 12.7% to €79.8 million, and Sweden posted growth of 7.4% to €74.2 million.

Emerging Markets Record Notable Increases

Beyond the ten main destination markets, several emerging economies recorded particularly strong increases in clothing exports from Portugal. Poland grew by 25% to €63.9 million, representing an additional €12.8 million compared with the same period of 2025. Mexico recorded a 71.7% rise to €43.4 million, adding €18.1 million year-on-year. Vietnam registered an 88.2% increase to €20.5 million, an uplift of €9.6 million.

These figures from INE collectively reflect a broadly positive trajectory for Portugal textile exports through August, underscored by growth in technical textiles, woven apparel, and expanding trade relationships across both established and emerging markets.

A Milestone Edition Anchored in Three Core Themes

Marking its 30th anniversary, TITAS 2026 was structured around three defining pillars — Sustainability, Functional Applications, and Intelligent Manufacturing. Exhibitors across the three-day event showcased a wide range of innovations spanning recycled fibres, circular textile solutions, high-performance fabrics, and digitally enabled manufacturing technologies.

Sustainability at the Forefront

Sustainability remained the central thread running through TITAS 2026. Participating companies presented advances in textile-to-textile recycling, mono-material fabrics, resource-efficient production processes, and low-carbon materials. The collective focus reflected the industry’s growing commitment to reducing its environmental footprint through material science and circular design.

Functional Textiles Gaining Ground

Functional textile innovation was equally prominent. Exhibitors introduced moisture-management fabrics, cooling yarns, and breathable materials suited for sportswear, outdoorwear, and a broad range of technical applications. These functional fabrics underscored the expanding role of performance-driven textile innovation in addressing the needs of today’s end-use markets.

Intelligent Manufacturing and Digital Technologies Take Centre Stage

One of the more forward-looking aspects of TITAS 2026 was its emphasis on the integration of artificial intelligence, automation, and digital technologies within textile manufacturing. Smart factory solutions, AI-assisted production systems, and traceability technologies were prominently featured, demonstrating the industry’s growing emphasis on operational efficiency and sustainable production at scale. Intelligent manufacturing, long a topic of discussion, was visibly transitioning from concept to implementation across multiple exhibiting brands.

Strengthened International Presence

International participation at TITAS 2026 was notably broadened this year. A new Italy Pavilion made its debut, while the Korea Pavilion expanded its footprint and the Japan Pavilion made its return. These national pavilions added depth to the event’s global character and provided buyers and sourcing professionals with access to a wider range of regional manufacturing expertise.

The event also hosted a series of seminars covering textile circularity, sustainability regulations, digital product passports, and emerging manufacturing technologies — providing delegates with both strategic insight and practical knowledge relevant to current industry developments.

Taiwan Textile Select: A New Showcase for the 30th Edition

To mark its 30th edition, TITAS introduced Taiwan Textile Select, a new initiative designed to connect innovative textile materials with finished apparel. Presented alongside the show’s Trend Zone, this showcase highlighted Taiwan’s capabilities across the full value chain — from textile development and functional applications through to garment manufacturing. The initiative offered buyers a more integrated view of what Taiwanese manufacturers can offer across product categories.

Business Outcomes and Market Significance

With strong buyer participation, extensive business matchmaking, and an estimated USD 60 million in potential business opportunities, TITAS 2026 reaffirmed Taiwan’s position as an important sourcing and textile innovation hub for the global industry. The combination of sustainable textiles, functional fabrics, and intelligent manufacturing solutions across a single platform made the 30th edition one of the event’s most substantive gatherings to date.

Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association (PTEA), said the industry was facing mounting pressures that threatened its competitiveness and international market share. Inflation in Western economies has weakened buyer demand, while sea freight rates have climbed to between 1.5 and 2.5 times their previous levels, further squeezing exporters’ margins.

“The decline in export trade volume is unprecedented,” Mr Mukhtar said, warning that financially stronger businesses would be better positioned to withstand the downturn, while recovering lost markets could prove difficult.

The pressure extends across Pakistan’s textile value chain, from cotton ginning and spinning to weaving, processing and knitting. High domestic inflation has also weakened local demand, adding to financial strains across the industry.

PTEA calls for immediate policy intervention

To protect Pakistan textile exports, Mukhtar proposed temporary support through the Duty Drawback of Local Taxes and Levies scheme, with rebates of 6%–8%. He also called for the prompt payment of outstanding government refunds and the removal of cross-subsidies embedded in industrial energy tariffs to lower operating costs.

He raised concerns over the implementation of the Export Finance Scheme (EFS). Although the FY27 Finance Bill announced a fixed financing rate of 4.5%, exporters were reportedly paying at least 5.5%, with some facing rates as high as 8.5%.

Mukhtar also questioned the allocation of approximately Rs200 billion in EFS financing to yarn exporters, despite yarn being included on the scheme’s negative list. He similarly challenged financing for sugar exporters, citing the sector’s highly regulated status.

Meanwhile, textile exporters that substantially exceed the State Bank of Pakistan’s prescribed export-performance threshold are reportedly struggling to secure adequate financing. Some businesses achieve five to six times the required performance against a minimum threshold of twice the prescribed level, he said.

Mukhtar argued that the allocation system risks disadvantaging value-added manufacturers and businesses that generate significant foreign exchange earnings.

Financing and modernisation proposals

While welcoming additional EFS funding for small and medium enterprises (SMEs), Mukhtar questioned whether the proposed increase could be fully utilised. He said the additional Rs300 billion allocation would require Rs600 billion in export performance, while the previous year’s Rs100 billion SME allocation had reportedly remained unused.

He urged the government to distribute financing more closely in line with each segment’s contribution to exports, noting that the country’s top 100 exporters account for as much as 60% of total export volume.

To improve productivity and strengthen the supply chain, PTEA proposed a dedicated Rs140 billion modernisation package. The plan includes Rs20 billion each for ginning and sizing, alongside Rs50 billion each for weaving and processing.

The proposed facilities would support machinery replacement, technological upgrades, automation and more sustainable production. Mukhtar called on the federal government and the State Bank to develop the programme jointly in consultation with industry representatives.

He also advocated a 10-year strategy for Pakistan textile exports, built around existing industrial capabilities, exportable surplus and structural reforms to improve international competitiveness.

“Historically, we have been reactive. The current situation demands a proactive approach,” he said, adding that timely support would cost considerably less than rebuilding export markets after they had been lost.

Regional Performance Remains Sharply Divided

Across global regions, the picture was far from uniform. South Asia emerged as the strongest performer, registering a positive current business conditions reading of +13 percentage points, while Africa followed at +9 percentage points — making these two the only regions to report positive readings in the ITMF textile survey.

In contrast, North and Central America recorded the weakest regional reading at -56 percentage points. South America followed at -44 percentage points, and Europe posted a reading of -36 percentage points, underscoring the breadth of challenges facing manufacturers across developed and emerging economies alike.

Value Chain Performance Varies Considerably

Performance across the textile value chain also differed meaningfully by segment. Fibre producers stood out as the only segment to report positive current business conditions, with a reading of +67 percentage points. Spinners, however, recorded -33 percentage points, while finishers reported -42 percentage points. Textile machinery manufacturers registered -35 percentage points, which the survey attributed to companies’ continuing reluctance to commit to capital expenditure — a reflection of broader caution prevailing through the global textile market.

Six-Month Outlook Improves, Though Confidence Is Uneven

Forward-looking sentiment was more encouraging. The global expectations indicator for the next six months reached +19 percentage points. However, 46% of respondents expected no change in conditions, indicating that improved sentiment has not yet translated into broadly stronger trading signals on the ground.

Africa was the most optimistic region with an expectations reading of +59 percentage points, while East Asia at -20 percentage points and South-East Asia at -6 percentage points were the only regions to retain a negative outlook for the period ahead. Among industry segments, fibre producers again led with an expectations balance of +67 percentage points.

Order Intake, Demand Concerns, and Inflationary Pressures

Order intake improved only marginally to -24 percentage points, remaining in negative territory. South America reported a record low of -69 percentage points in this category, pointing to particularly difficult demand conditions in the region.

Weak demand remained the concern most frequently cited by respondents in the ITMF survey, with 56% of participants flagging it as a primary issue. High raw-material prices were cited by 42% of respondents, and energy costs were flagged by 41%. The federation noted that rising costs and inflation could limit the scope for a meaningful near-term recovery across the global textile market.

The survey also linked renewed inflationary pressure specifically to the war in Iran. Meanwhile, concern over geopolitics fell to 36% of respondents, down from 46% recorded in the July survey.

US Tariffs Prompt Varied Industry Responses

Companies have responded to US tariffs in a range of ways. Nearly three in ten respondents — 29% — said they were actively diversifying into markets outside the United States. A further 23% were investing in automation and efficiency measures, while the same proportion reported absorbing higher costs directly.

Order Backlogs, Capacity Utilisation, and Inventory Levels

Order backlogs shortened slightly to 2.3 months, remaining within the 2.0-to-2.5-month range that has been observed since mid-2023. The ITMF noted this reflects a prevailing tendency among companies to operate primarily against confirmed orders rather than building longer production pipelines.

Capacity utilisation increased to 71%, rising above the 68% low recorded in November 2023. Even so, it remained well below the levels of more than 80% reported prior to late 2022 — a gap that continues to weigh on the broader outlook for the global textile market.

Order cancellations held steady at approximately 2% on average, though finishers recorded increases for three consecutive survey periods. Inventory levels were generally lean, with South-East Asia reporting a record low. The Americas were an exception: relatively high inventories combined with weak incoming orders pointed to a build-up of unsold stock, according to the ITMF textile survey findings.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president has acknowledged the shift, noting that buyers are increasingly spreading their sourcing across multiple countries rather than depending on a single supplier nation. For Bangladesh, this is more than a routine adjustment. Once buyers begin factoring country-level risks more heavily into their sourcing decisions, cost competitiveness and product quality alone are no longer enough to hold business.

LDC Graduation Adding Uncertainty to an Already Shifting Landscape

One of the key risk variables buyers are reportedly weighing is Bangladesh’s scheduled graduation from Least Developed Country (LDC) status. Bangladesh remains on course to graduate on November 24, 2026, although the government has sought a three-year deferment and the process remains pending.

The uncertainty carries real weight. LDC trade preferences are central to Bangladesh garment exports’ competitiveness in several major export markets. But graduation does not produce the same outcome across all markets, which means buyers must assess not only the timing of graduation but also the specific tariff treatment that follows in each market where they source from Bangladesh.

The EU Trade Equation

The European Union remains the most critical market in this equation. Bangladesh will retain Everything But Arms (EBA) duty-free preferences for three years after LDC graduation, meaning there is no immediate cliff-edge loss of access. However, that three-year buffer is a window, not a permanent resolution.

Within that same window, competition is intensifying. Vietnam already holds an EU free trade agreement. The EU and India concluded negotiations on their own FTA in January, with most tariffs on Indian textiles and apparel expected to be removed once the agreement takes effect. Bangladesh shipped an estimated €19.41 billion (approximately $21.8 billion) worth of apparel to the EU in 2025, accounting for 21.57 per cent of the bloc’s total apparel import market — a scale that makes the comparison with India and Vietnam impossible to ignore. European buyers are steadily gaining more preferential sourcing options, while Bangladesh’s post-EBA trade position remains unresolved.

Energy Disruptions Compounding the Sourcing Risk Picture

Adding urgency to an already complex picture, a recent gas shortage disrupted industrial production across Bangladesh and affected shipment schedules at a particularly sensitive time. Industry groups reported order cancellations and reductions as factories struggled with interrupted supply. One industry survey reportedly found that 55 per cent of surveyed knitwear factories experienced reduced or cancelled orders during the disruption, 78 per cent faced partial production shutdowns, and 87 per cent encountered shipment delays. Factories also reportedly incurred higher costs from alternative fuel and transportation arrangements.

Supply Recovery and the Durability Question

The situation has since improved considerably. Data from Petrobangla, the state-owned national oil company of Bangladesh, showed gas supply rising to approximately 2,600 million cubic feet per day (mmcfd) in late September, up from around 2,300 mmcfd a month earlier, following a recovery in liquefied natural gas (LNG) supplies. The BGMEA president has also acknowledged that the energy disruption has improved significantly, and reports from industry areas indicate production has been picking up.

Yet even as the immediate energy pressure eases, the more important question is whether this improvement will prove durable. The energy disruption arrived at precisely the wrong moment — when buyers were already reassessing global sourcing strategies. Bangladesh garment exports cannot afford repeated uncertainty over whether factories can reliably maintain production and shipment schedules while competing for orders against Vietnam, India, and other sourcing destinations.

Industry Response and the Case for an EU Free Trade Agreement

The BGMEA chief has reportedly stated that buyers will not necessarily concentrate all sourcing in one country, and that the association is actively working to attract new buyers while encouraging existing ones to increase sourcing from Bangladesh. Notably, he argued that Bangladesh should pursue a Free Trade Agreement with the EU within three to four years, rather than depend on a Generalised Scheme of Preferences Plus (GSP Plus) arrangement.

This position takes on added significance given the current trade environment. With the three-year EBA post-graduation window available, the priority, as industry insiders see it, should be using that time to negotiate a longer-term trade arrangement with the EU — rather than allowing uncertainty over post-EBA access to become yet another factor in buyers’ sourcing calculations.

Industry insiders have also stressed that the government must make the recent improvement in gas and electricity supply last. The two issues — EU trade preferences and energy reliability — are distinct in nature but converge at the same decision point: the buyer choosing where to place the next order.

What Bangladesh’s Competitive Position Now Depends On

Bangladesh garment exports retain considerable strengths — established factories, significant production capacity, and a well-developed buyer base built over decades. But the landscape around it is shifting. India is improving its EU market access through a concluded FTA, Vietnam already holds preferential access, and global sourcing diversification is a stated objective among major retailers. Meanwhile, Bangladesh is still working through its post-LDC trade future while recovering from an energy shock that reinforced buyer concerns about supply reliability.

The central question for the Bangladesh garment industry is no longer simply whether it can attract buyers. It is whether it can offer buyers enough structural certainty — on trade preferences, energy reliability, and production continuity — to choose Bangladesh over an increasingly competitive set of alternatives.

A convergence of factors – rising tariffs, intensifying regional competition, shifting buyer priorities, and a structurally changing retail landscape – is placing Bangladesh apparel exports under mounting pressure in the US market, raising serious questions about the sector’s long-term positioning.

The Numbers Tell a Difficult Story

Bangladesh’s share of the US apparel import market has been slipping. While the country remains one of the largest suppliers of garments to American retailers, its growth trajectory in that market has not kept pace with some competing nations. US apparel buyers are increasingly diversifying their sourcing away from Bangladesh, even as the country continues to offer competitive manufacturing costs.

According to data referenced in industry discussions, countries such as Vietnam, India, and even newer entrants are capturing greater attention from US buyers, in part because they offer a broader product mix, faster turnaround times, or more favourable trade terms – advantages that pure cost leadership cannot easily offset.

Tariffs Adding to the Burden

One of the most direct pressures on Bangladesh apparel exports to the United States is the tariff structure. Unlike several competing nations that benefit from preferential trade agreements with the US, Bangladesh does not enjoy duty-free access to the American market. Garments exported from Bangladesh face tariffs that can range significantly depending on product category, putting Bangladeshi exporters at a structural disadvantage compared to peers operating under free trade arrangements.

This tariff gap has long been a concern for Bangladesh’s RMG exports, but it has grown more acute as US buyers become increasingly cost-conscious in a challenging domestic retail environment. When tariff differentials are layered on top of rising production costs within Bangladesh itself – including wages, energy, and compliance expenditures — the price advantage that Bangladesh apparel exports once commanded begins to narrow considerably.

Compliance and Sustainability: A Double-Edged Demand

The demands placed on Bangladesh’s garment industry by US buyers have also grown more complex. Beyond price, buyers increasingly require demonstrated compliance with environmental, social, and governance standards. Bangladesh has made meaningful investments in green factory infrastructure – the country hosts some of the highest numbers of LEED-certified garment facilities in the world – yet translating those investments into commercial advantage in the US apparel market has proved uneven.

US retailers and brands are pressing suppliers on issues ranging from carbon footprint and chemical management to worker welfare and supply chain transparency. Meeting these requirements demands ongoing capital expenditure and management capacity, costs that smaller and mid-tier Bangladeshi manufacturers often struggle to absorb while simultaneously competing on price.

Product Diversification Remains a Gap

A recurring vulnerability highlighted in assessments of Bangladesh’s RMG exports is the country’s heavy dependence on a relatively narrow product range – predominantly basic knitwear and woven categories such as t-shirts, trousers, and casual wear. While Bangladesh dominates in these segments, the higher-value categories – technical wear, performance fabrics, outerwear, and lifestyle apparel – remain underdeveloped in Bangladesh’s export basket.

US apparel buyers seeking more complex or value-added products frequently turn to other sourcing destinations that have invested more deeply in product development, design capability, and raw material integration. For Bangladesh apparel exports to regain and extend ground in the US market, a meaningful shift toward higher-value product categories is widely seen as essential.

The China-Plus-One Factor and Its Limits

The global sourcing strategy widely referred to as “China-plus-one” – in which brands reduce reliance on Chinese manufacturing by adding alternative supplier countries – initially appeared to offer Bangladesh a significant opportunity. However, the benefits of this reorientation have not flowed as fully to Bangladesh as many in the industry anticipated.

Vietnam, in particular, has captured a disproportionate share of orders redirected away from China, owing to its stronger presence in higher-value segments, its trade agreement network, and its proximity to Chinese raw material supply chains. Bangladesh’s RMG exports have benefited to some degree from supply chain diversification trends, but not to the extent that its production scale and cost structure might theoretically support.

Freight, Lead Times, and Logistics Pressures

Geography and logistics also play into Bangladesh’s competitive position in the US apparel market. Longer lead times relative to nearshore competitors in the Western Hemisphere, combined with periodic port congestion and logistics disruptions at Chittagong, have made agility-focused US buyers cautious about deepening their Bangladesh sourcing for fast-replenishment programmes.

As US retailers continue to reduce inventory risk and shorten buying cycles in response to unpredictable consumer demand, suppliers that can offer speed and flexibility alongside cost competitiveness gain a structural advantage – one that Bangladesh’s garment industry, despite its enormous scale, has found difficult to fully match.

Industry Voices and the Path Forward

Leaders within Bangladesh’s garment industry and trade bodies have acknowledged that the sector must evolve beyond its low-cost identity. Discussions within the industry point to the need for investment in technology, workforce skills upgrading, raw material backward linkage development, and brand-building capacity if Bangladesh apparel exports are to remain competitive in the US and other premium markets over the long term.

The Bangladesh Garment Manufacturers and Exporters Association and related industry bodies have consistently advocated for preferential trade access to the US market — a structural remedy that could partially offset the tariff disadvantage – though no concrete policy progress on that front has been reported to date.

A Sector at a Crossroads

Bangladesh’s RMG exports remain a cornerstone of the national economy, accounting for the overwhelming majority of the country’s foreign exchange earnings and employing millions of workers, a significant proportion of whom are women. The stakes of the sector’s performance in the US apparel market – its largest single buyer country  are therefore not merely commercial but deeply social and economic.

The message emerging from current market dynamics is clear: low cost alone is no longer a sufficient value proposition for Bangladesh apparel exports in the US market. Competing effectively going forward will require a more complex and diversified offering – one that combines cost efficiency with quality, compliance, speed, and product sophistication.

Whether the sector can execute that transition at the pace and scale required remains the defining challenge for Bangladesh apparel exports in the years ahead.

A Sector Still Recovering From Its Own Peak

Export data tells a telling story. Sri Lanka apparel exports reached approximately $5.59 billion in 2022, before declining to $4.54 billion in 2023 and recovering partially to $4.76 billion in 2024. By 2025, exports had climbed back to around $5.02 billion, marking a return to pre-decline levels — but still well below the 2022 high. To reach the $8 billion target, the industry would need to grow its export earnings by roughly 60 per cent from current levels within the next five years.

What makes this challenge even more pronounced is the fact that the $8 billion target is not entirely new. Sri Lanka’s apparel industry had previously set the same goal — with a 2025 deadline. That target was not met, with exports remaining around the $5 billion mark throughout. The renewed 2030 ambition therefore brings with it a pointed question: what will be done differently this time around?

The Real Question Is Structural, Not Just Numerical

The arithmetic of the textile export growth target is relatively simple: add approximately $3 billion to annual export revenues over five years. The more complex question is where and how that growth will materialise. Industry stakeholders and analysts suggest that the path forward is less about broadening the geographical footprint of garment manufacturing and more about deepening the value chain.

Sri Lanka does have precedent for successfully deploying coordinated industrial policy in this sector. The 200 Garment Factories Programme, launched during the 1990s, effectively decentralised garment manufacturing beyond the capital Colombo, channelled investment into rural areas and widened the geographic base of the industry considerably. However, the nature of today’s challenge is substantially different.

Reducing Dependence on Imported Inputs

One of the most persistent structural constraints facing the apparel industry is its heavy reliance on imported raw materials — particularly fabric. Industry estimates place annual textile and apparel input imports at around $2 billion. Expanding domestic production of synthetic yarn, fabrics, trims, and packaging would strengthen local supply chains and increase domestic value addition.

That said, import substitution on its own would not be enough to close a $3 billion gap. The broader consensus among industry stakeholders is that meaningful progress requires combining greater domestic value addition with sustained growth in overall Sri Lanka apparel exports.

Productivity, Technology and Higher-Value Products

Industry leaders are placing increasing emphasis on automation, robotics, artificial intelligence, and digital production systems as tools for improving manufacturing efficiency and competitiveness. Alongside these productivity-focused measures, there is a growing push to move into higher-value market segments — including technical textiles, performance wear, and specialised products — where Sri Lankan manufacturers can compete on capability and craftsmanship rather than primarily on cost.

This shift toward higher-value production is seen as a key component of the apparel industry 2030 strategy, enabling manufacturers to generate greater revenue per unit and reduce vulnerability to cost-based competition from lower-wage economies.

Market Access as a Growth Lever

Domestic value addition and productivity improvements will only deliver results if Sri Lanka can maintain and expand its access to major export markets. Preferential market access remains a critical factor in the industry’s global competitiveness.

Recent changes to the United Kingdom’s Developing Countries Trading Scheme are one example of how policy shifts in importing countries can directly affect Sri Lankan manufacturers. The revised rules of origin under the scheme could potentially give Sri Lankan apparel exporters greater flexibility in sourcing inputs, while still retaining preferential access to the UK market — an important consideration as the industry seeks to diversify and grow.

JAAF’s Policy Calls

The Joint Apparel Association Forum (JAAF) has reportedly called for a comprehensive policy response to support the industry’s ambitions. This includes stronger investment incentives for upstream textile manufacturing, improved preferential market access, and better coordination among the institutions involved in the development of the textile and apparel sector. These calls reflect a broader recognition that reaching the $8 billion mark will require concerted effort across government, industry, and trade policy.

What Needs to Happen

The path to $8 billion in Sri Lanka apparel exports by 2030 is defined by several interconnected priorities. Industry stakeholders argue that the country must deepen its domestic supply chain, raise manufacturing productivity, increase value addition at each stage of production, develop higher-value product categories, and secure expanded opportunities in both existing and new markets.

Each of these elements individually contributes to apparel industry 2030 readiness. Together, they form the foundation of what would need to be a coordinated and sustained push to add $3 billion to annual export earnings — within a five-year window that has already begun.

Whether the industry can deliver on the 2030 target where it fell short of the 2025 one will depend on whether the structural reforms, investment incentives, and market strategies now being discussed translate into measurable action on the ground.

Vietnam textile exports now reach 137 countries and territories worldwide, with the United States alone accounting for approximately 40 per cent of total overseas shipments. Alongside the US market, the European Union, the Republic of Korea, Japan, China, and ASEAN nations continue to serve as well-established export destinations. Regions such as Africa and the Middle East have also emerged as promising corridors for market diversification, offering the industry additional avenues for growth beyond its traditional strongholds.

Flexible Strategies and Enterprise Adaptability at the Core

Vietnam Textile and Apparel Association (VITAS) chairman Vu Duc Giang credited the sector’s performance to a combination of flexible strategies, enterprise adaptability, and meaningful advances in both green and digital transformation. These factors, he noted, have collectively shaped the industry’s ability to navigate an increasingly complex and demanding global trade environment.

According to Giang, green and digital transformation have become essential pillars of the sector’s development roadmap for 2026–2030, extending further into a longer-term vision reaching 2035. Enterprises across the garment industry are progressively integrating automation, robotics, and artificial intelligence into both production processes and management systems. Notably, investment in infrastructure, artificial intelligence, and robotics now accounts for roughly 65 to 68 per cent of total investment at many enterprises within the sector — a clear indication of how seriously the industry is embracing technological modernisation.

Sustainability Investments Align With Vietnam’s Net-Zero Goals

Beyond digital upgrades, manufacturers have also been directing investment toward sustainability-focused initiatives. Rooftop solar power installations, upgraded wastewater treatment systems, and an increased reliance on environmentally friendly materials are among the measures being adopted across the garment industry. These steps are closely aligned with Vietnam’s national commitment to achieving net-zero emissions by 2050.

Giang emphasized the importance of supportive local governance in sustaining this momentum. He called on local authorities to develop specialised industrial parks equipped with centralised wastewater treatment facilities that meet international standards. Such infrastructure, he indicated, would play a vital role in attracting investment in textile and dyeing operations while also addressing persistent bottlenecks in the domestic supply of raw materials and accessories — a challenge that continues to affect the broader value chain.

Broader Value-Chain Integration Supporting Export Resilience

The sector’s recent progress reflects not only broader market access and technology adoption, but also the strengthening of value-chain linkages within Vietnam. Market diversification, combined with green transformation and digital upgrades, has enabled Vietnam textile exports to remain competitive despite shifting demand patterns globally. As the industry works toward its 2026 export target, the interplay between enterprise-level innovation and policy-level infrastructure development will remain central to sustaining that competitive edge in international markets.

While the headline numbers reflect a positive trajectory for Vietnam textile exports, they tell only part of the story. Beneath the surface, manufacturers are navigating a considerably more challenging operating environment — one shaped by volatile input costs, shifting trade dynamics and rising competitive pressure from regional peers.

The Operational Challenges Behind the Numbers

Cost Pressures and Market Headwinds

Reports highlight a range of structural and cyclical pressures weighing on the garment exports Vietnam sector. These include fluctuations in cotton and fibre prices, exchange-rate volatility, softening demand from key markets such as the United States and the European Union, and elevated logistics and raw-material costs. On top of these, stricter rules-of-origin requirements and trade-remedy regulations are adding compliance burdens, while intensifying competition across the region is further compressing margins.

Garment manufacturers are also dealing with a shift in buyer behaviour — smaller orders, shorter lead times and aggressive price negotiation are now common features of the trading environment. This means that evaluating Vietnam textile exports purely through headline turnover or capacity utilisation figures can be misleading.

Margin Quality Over Volume

For manufacturers operating in the textile industry Vietnam, the quality of orders and the margins they generate are becoming increasingly critical. Shorter lead times and fragmented orders can place significant pressure on production scheduling, inventory management and working capital. As a result, industry participants are placing greater emphasis on cash-flow discipline, tighter receivables management and productivity improvements, alongside a more systematic use of data in operational decision-making.

The strategic focus is gradually shifting — from sustaining export volumes to improving efficiency and protecting profitability at every stage of the value chain.

Import Dependence: A Structural Vulnerability

One of the more significant structural challenges facing the Vietnam apparel industry is its reliance on imported textile inputs. Vietnam reportedly imported more than $19.37 billion worth of textile and garment materials in the first eight months of 2026, up an estimated 4 per cent compared to the same period a year earlier, according to preliminary trade statistics.

China remains the dominant supplier of these materials, leaving Vietnamese manufacturers exposed to input price movements, supply-chain disruptions and shifts in trade policy. This dependence on imported inputs also has implications for manufacturers seeking to benefit from preferential trade arrangements.

Rules of Origin Under the CPTPP

Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), textile and apparel products are subject to product-specific rules of origin. Many apparel products fall under a yarn-forward structure, which requires specified stages of textile production to occur within CPTPP member countries. The agreement does provide for certain exceptions, including limited allowances for non-originating materials and a short-supply list, but import dependence — particularly on non-CPTPP sources — can limit the ability of manufacturers to qualify for preferential treatment under these provisions.

A More Complex Regional Competitive Landscape

Vietnam’s position in global textile supply chain markets is being tested not only by cost pressures, but also by the performance of competing producers. Reports citing Vinatex noted that China’s textile and garment exports grew 2.4 per cent in the first seven months of 2026. Bangladesh recorded export growth of 3 per cent in the first eight months, while Indonesia reported growth of 3 per cent in the first seven months of the same year.

China continues to benefit from a deeply integrated textile supply chain, while Bangladesh and other Asian producers remain formidable competitors in global apparel markets. The data indicates that performance is not uniform across competing nations — it varies across product categories and destination markets — but taken together, the regional picture underscores the competitive pressure on Vietnam apparel industry participants.

What Will Drive Competitiveness Going Forward

For Vietnam, remaining competitive extends well beyond production cost alone. The ability to respond swiftly to smaller and shorter-cycle orders, secure access to competitively priced inputs, comply with rules-of-origin and trade regulations, and progressively move into higher-value product segments will all play a role in determining where Vietnamese manufacturers stand in the global textile supply chain.

Environmental performance and supply-chain traceability are also gaining prominence as considerations for exporters. As customers and destination markets increasingly impose sustainability requirements, due-diligence obligations and traceability standards, investments in cleaner production, energy efficiency and digital traceability are becoming both a compliance necessity and an operational advantage.

The Road Ahead for Vietnam Textile Exports

The broader outlook for Vietnam textile exports is therefore not simply a matter of whether volumes will continue to rise. The more consequential question for manufacturers is whether that growth can be converted into sustainable margins — through productivity gains, stronger working-capital management, greater supply-chain resilience and improved value capture from each order processed.

The six-month performance to August 2026 confirms that the Vietnam apparel industry retains meaningful export momentum. But translating that momentum into durable profitability will require more than volume growth — it will demand sharper operational management and a clearer focus on the quality, rather than just the quantity, of what is being exported.

The demand was formally put forward at the European Parliament in Brussels on September 30, during a debate titled ‘Making Circularity in Textiles Viable in Europe: Transparency, Recycling, and Industrial Competitiveness’. The session brought together representatives from the Portuguese and European textile sectors, European institutions, and organisations working in circularity, recycling, and innovation.

The Case Against the 2-Euro Fee

César Araújo, president of ANIVEC — Portugal’s National Association of the Clothing, Apparel and Fashion Industries — led the charge against the current levy. He described the 2-euro handling fee as wholly inadequate and presented data illustrating the sheer scale of the challenge: approximately 2.7 billion small parcels entered the European market in 2023, rising to 4.1 billion in 2024, and reaching close to 6 billion in 2025.

In Araújo’s assessment, the now-dismantled ‘de minimis’ regime was a key enabler of this surge, facilitating a massive influx of products — particularly through Asian e-commerce platforms — into the EU market without adequate checks or costs.

“This is not about customs duties. It is about fair competition, product safety, taxation and consumer protection,” Araújo stated during the Brussels debate.

He further argued that the revenue generated by a higher parcel levy should be directed toward funding the human and technological resources necessary to inspect the hundreds of millions of parcels entering Europe each year. He also called for enhanced monitoring of imports and a closer examination of the impact of the Generalised System of Preferences, with the aim of enabling the EU to respond swiftly to any trade imbalances.

European Textile Industry: Sustainability Cannot Come at the Cost of Jobs

At the core of the Brussels debate was a fundamental tension: how can the European textile industry transition to a more sustainable, circular model without placing the full financial burden on European producers, while competitors from outside the bloc operate under far less stringent conditions?

Araújo addressed this directly, stating that green ambitions cannot be achieved by hollowing out domestic production. “Europe cannot become greener or cleaner by losing its industry. If production simply moves to another part of the world, emissions will not disappear. European jobs will disappear,” he said.

The European textile industry currently comprises around 200,000 companies and supports approximately 1.2 million jobs. Araújo’s message was unambiguous: the sector is not seeking protection from competition but rather assurance that competition operates on fair terms.

Practical Tools for Making Textile Circularity Work

The debate also turned to the practical instruments available to support the EU textile circularity agenda. Discussions covered the Digital Product Passport, eco-design requirements, and Extended Producer Responsibility (EPR) schemes, alongside the considerable logistical challenges involved in the collection, sorting, and recycling of textile waste.

Araújo outlined three priorities he considers essential for making circularity economically viable within the European textile industry. First, the creation of a functional market for recycled fibres. Second, formal recognition of the value of recycled materials produced in Europe. Third, an EPR scheme equipped with eco-modulation mechanisms capable of rewarding products that are more durable, more repairable, have a smaller carbon footprint, and incorporate a higher share of recycled materials.

He also raised the question of labelling, arguing that the ‘Made in Europe’ designation should go beyond indicating place of production to also communicate the conditions and methods used during manufacturing — giving consumers a more complete picture of the products they purchase.

In his closing remarks, Araújo called for European-level support for recycled fibres, the establishment of eco-modulation mechanisms to encourage investment in sustainability, and the development of a dedicated European solution for textile waste. He urged that the European Union’s next budget cycle allocate specific resources toward supporting the transformation of the sector.

Who Was in the Room

The Brussels debate was moderated by journalist and event host Jack Parrock and included contributions from several key figures across the industry and circularity space: Mário Jorge Machado from EURATEX; Marc Puyuelo from Coleo; Eva Moalic from Refashion; and Miguel Gonçalves from Nau Verde. It was the second such meeting organised in Brussels in 2026, with organisers indicating their intention to remain active contributors to the European conversation on competitiveness, sustainability, and the future of the European textile industry.

LUSITANO Project: Investing in Textile Transformation

On the innovation front, the LUSITANO Project is working to drive structural change across the Portuguese textile value chain — from fibre to finished garment. The initiative brings together 17 partners and represents a total investment of 111.5 million euros. Its focus spans the adoption of advanced technologies, including artificial intelligence, as well as the development of sustainable and circular production solutions for yarns, fabrics, knitwear, and garments made from natural and recycled fibres.

The project is coordinated through CENIT — the Centre for Textile Intelligence — a Portuguese non-profit association whose principal member is ANIVEC. CENIT conducts strategic work in internationalisation, innovation, and communications for the Portuguese textile and clothing sector. Through its MODAPORTUGAL strategy, the organisation works to strengthen the international standing of an industry defined by its blend of tradition, creativity, sustainability, and technology.

The broader message from Brussels was consistent: the path toward EU textile circularity must be built on fair trade conditions, meaningful financial instruments, and policy frameworks that support — rather than undermine — the European textile industry’s capacity to lead the transition.