Bangladesh exporters struggle as production costs surge 30-40 per cent

Bangladesh exporters are losing market share to India, Vietnam and China as rising energy, financing and logistics costs squeeze margins. Merchandise exports fell nearly 5 per cent in 2025, while higher port charges, tariffs and production costs added to competitive pressures

New Delhi: Bangladesh’s exporters are losing market share to regional rivals such as India, Vietnam and China as rising energy, financing and logistics costs erode profit margins, a report has said.

The report by Bangladesh-based The Daily Star said exporters were finding it difficult to absorb the higher costs because of limited scope to pass them on to overseas buyers, raising the risk of lost orders and shrinking market share.

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Industry estimates showed that production costs had surged by nearly 30-40 per cent over the past several years, driven by higher gas and electricity prices, wages, interest rates and exchange-rate depreciation.

Bangladesh’s merchandise exports fell nearly 5 per cent in 2025 to $47.74 billion, according to official data, while Vietnam’s exports rose 16.8 per cent and China’s 5.5 per cent over the same period.

Even a small difference in price can shift an order to competitors, industry leaders said, adding that the escalating conflict in the Middle East and the US administration’s additional 10 per cent tariff were adding to the pressure on exporters.

Buyers may shift orders when Bangladesh’s free-on-board (FOB) price — the price before shipping and insurance — is just 1-2 per cent higher than that of a competitor, the report cited an industry expert as saying.

Such a price gap on a $4 garment would translate into a difference of $40,000-$80,000 on a one-million-piece order, said a former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Chattogram Port’s tariff revision in 2025 resulted in an average 41 per cent increase in service charges, while charges for a 20-foot container increased 37 per cent to Tk 16,243 from Tk 11,849, according to Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Banks were refraining from providing sufficient working capital or were taking too long to process financing, despite government calls for support, the report noted.