Around 100 ready-made garment (RMG) factories in Bangladesh’s Ashulia and Gazipur industrial zones have been shut due to ongoing labour unrest, The Financial Express reported earlier this week.

Sources told the newspaper that around 85 factories in these areas declared a paid holiday on Monday to prevent further escalation, as the unrest has persisted for a week. Large manufacturers, including Sharmin and Hameem, which employ over 30,000 workers, were among those that announced the holiday.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) confirmed to the newspaper that 88 factories, including those under Sharmin, Hameem, Sterling, Ananta, and Windy Groups, declared the paid holiday.

Labour leaders have attributed the unrest to both external influences and internal factory issues. Amirul Haque Amin, president of the National Garment Workers Federation, told The Financial Express that outside political groups are attempting to exert control over garment-related trades. Internally, many terminated workers are reportedly blacklisted through the BGMEA database, leaving them unemployed. Other grievances include delayed or unpaid wages, discrepancies in bonuses, and mistreatment by mid-level staff.

BGMEA data shows that as of Monday, only 38.51% of its 2,145 active factories had paid wages for August, with 1,319 factories yet to do so, according to The Financial Express.

The Bangladeshi RMG industry was already in crisis before this current round of labour unrest. Operations were severely impacted during the student protests, which culminated in the abrupt resignation of ex-Prime Minister Sheikh Hasina on August 5. An interim government has been in office since August 8.

The industry has also been affected by broader problems in the Bangladeshi economy, such as power shortages. Recent floods, which disrupted cotton supplies, have further exacerbated the crisis.

Bangladesh's garment industry plays a crucial role in its economy and is a key player in the global apparel market, with the US, EU, UK, and Canada being its largest export markets. However, in the first half of 2024, RMG exports to the EU fell by 4.98% year-on-year to €8.72bn ($9.65bn), according to local media reports citing Eurostat data.

Experts believe that India’s RMG sector could benefit from the crisis in Bangladesh. Sandeep Jain, executive director of Ludhiana-based Monte Carlo Fashions, stated in an interview with Mumbai-based business news channel CNBCTV18 last month that the crisis could boost India’s garment industry by positioning the country as a preferred alternative for global buyers.

New Delhi-based research firm Primus Research suggests that Indian textile businesses could potentially gain an additional $300-400mn in monthly revenue if 10-11% of Bangladesh’s textile exports are redirected to India.

To capitalise on this opportunity, India needs a strategic approach that includes improving infrastructure, enhancing policy support, and securing favourable trade deals, particularly with the UK and EU, a Primus Research report published last month said.

Approximately 25% of textile units in Bangladesh owned by Indian companies—such as Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing—are anticipated to move operations to India, the report stated.

Indian textile hubs like Tirupur, known for their robust manufacturing capabilities, are expected to see a surge in orders.