Every year, Bangladesh’s garment factories generate between 400,000 & 570,000 tonnes of pre-consumer textile waste, cutting scraps, yarn remnants, fabric offcuts & defective rolls collectively known as jhut. This is not a disposal problem. It is a resource management catastrophe dressed up as one. According to a joint investigation by GIZ & H&M published in 2024, Bangladesh forfeits an estimated $4-5 billion annually in potential recycled textile export earnings simply because it has not built the policy architecture to capture that value.
The anatomy of a wasted resource
Bangladesh currently recycles only 18,000-24,000 tonnes of its cotton-rich jhut per year, a utilisation rate of barely 5-7% of recoverable waste. More than 55% of what escapes local landfills is shipped overseas in raw, unprocessed form, surrendering all value-added margin to recyclers in India, Pakistan & Europe. The remainder is downcycled into mattress filling & industrial rags, or incinerated on-site. The country has only 40 operational recycling mills, including Simco Spinning, Square Textiles, Beximco (in partnership with Spain’s Recover), & Akij Group, against a waste volume that dwarfs their combined capacity by an order of magnitude. Square Textiles recycles roughly 12 tonnes of waste per day. Fully utilising Bangladesh’s pre-consumer cotton waste alone, some 250,000 tonnes per annum, enough to produce approximately 1.25 billion garments, could reduce cotton import dependence by 15%. In 2022, Bangladesh imported cotton worth approximately Taka 47,869 crore (roughly $4.3 billion). The arithmetic of waste, properly understood, is the arithmetic of import substitution.
A regulatory clock ticking from Brussels
The European Union, which absorbs nearly 60% of Bangladesh’s garment exports, is not treating circularity as an aspiration. It is legislating it into existence on a fixed timetable, & the obligations will flow upstream to every factory that wishes to retain market access.
Table 1: EU regulatory timeline on textile circularity (2024-2030)
| Year | Regulation | Key obligation | Impact on Bangladesh |
| Jul 2024 (live) | ESPR (in force) | Framework for Digital Product Passport; ban on destruction of unsold goods introduced | Every product sold in EU requires traceability data, including recycled content |
| Jan 2025 | Waste Framework Directive | Separate textile waste collection mandatory across all EU member states | Increases scrutiny on upstream supply chain waste practices |
| Q2 2026 | ESPR, unsold goods ban | Destruction of unsold textiles prohibited for large enterprises; disclosure of destroyed goods volumes | Brands will demand recycled-fibre substitutes; opens market for recycled yarn exporters |
| Jun 2027 | Waste Framework Directive (EPR) | All EU member states must establish national textile EPR schemes; eco-modulated fees for non-recyclable products | Increases buyer pressure on Bangladeshi factories to document & reduce waste generation |
| 2027-2028 | ESPR, DPP delegated act | Textile-specific Digital Product Passport delegated act adopted; mandatory DPP compliance from 2028 (18-month grace) | Full supply-chain traceability required; recycled-content verification becomes export prerequisite |
Source: European Commission ESPR Working Plan 2025-2030; Waste Framework Directive; author’s synthesis.
The most consequential near-term deadline is Q2 2026, when the EU’s ban on destruction of unsold apparel takes effect for large enterprises. Brands that once quietly incinerated surplus inventory will instead need a legitimate destination for unwanted stock, ideally recycled fibre feedstock. Bangladesh, with its vast stocks of pre-consumer cotton waste, is positioned to supply precisely that. But only if it is ready.
What the competition already knows
Bangladesh’s rivals have not been idle. The evidence from India, China, Turkey & Vietnam reveals a coherent competitive pattern: each country has used the EU’s regulatory pressure as a strategic prompt to industrialise its recycling sector.
Table 2: Competitor country strategies in textile circularity
| Country | Policy anchors | Key actions | Status (2025-26) |
| India | Eco-Mark Rules 2024; PM MITRA parks; TexRamps scheme | Integrated circular textile clusters; Surat hub processing ~40% of synthetic fabric; Arvind Limited investing in closed-loop systems; recycled PET now cheaper than virgin polyester | Faces 2027 ‘compliance cliff’ on DPP; $179bn textile industry mobilising rapidly; material circularity rate 9.1% (NITI Aayog) |
| China | Policy-driven R&D; state-backed recycling pilots | Bailu Group launched Jiangxi chemical-regeneration recycling plant (Jul 2024); polyester depolymerisation at scale; Asia-Pacific recycling market at $598m in 2024, projected $11.4bn by 2034 | World’s most advanced pre-consumer recycling infrastructure; setting global price benchmark for recycled polyester |
| Turkey | World Bank CE transition programme; Zero Waste Initiative | World Bank (2025) report notes garment/textile firms lead all sectors in recycling adoption; ~20% of firms have formalised waste minimisation; digital traceability infrastructure underway | EU proximity advantage; strategic repositioning as circular textile hub serving European fast fashion brands |
| Vietnam | Draft EPR legislation covering textiles; circular textile clusters | Growing cluster-based circular textile infrastructure; compliance-readiness programmes for EU-facing exporters; EPR registration systems in development | Aggressively positioning as ‘compliance-ready’ alternative to Bangladesh; EU buyers already redirecting some sourcing |
Source: World Bank (2025); Outlook Planet C3 (2026); Global Market Insights (2025); NITI Aayog; author’s compilation.
The earnings Bangladesh is leaving on the table
The financial case for action is, at this point, almost embarrassingly clear. BTMA estimates that full monetisation of pre-consumer textile waste could generate $4-5 billion in additional annual export earnings, equivalent to adding a second tier to the country’s garment revenue base. Concurrently, local recycling could substitute approximately 15% of raw cotton imports, saving roughly $650 million per year in foreign exchange. Add import substitution in man-made fibre, & the combined annual fiscal benefit approaches $1.2 billion. The global textile-to-textile recycling market, valued at $4.8 billion in 2025, is projected to reach $44.8 billion by 2034 (CAGR: 24.9%). Bangladesh, with its unparalleled volume of clean pre-consumer cotton waste, should command a disproportionate share of that market. Instead, it is watching competitors build it.
What Dhaka must now do
Bangladesh must move on three fronts simultaneously. First, it needs a National Textile & Apparel Waste Database, a formalised registry of pre-consumer waste flows, with mandatory factory-level reporting linked to bonded warehouse licences. Without credible data, no EPR scheme or investment incentive can function. Second, VAT & tariff structures must be reformed. Currently, textile & apparel wastes like jhut transactions attract levies that make informal & untracked disposal economically rational. Exempting certified recycled-fibre transactions from VAT, & permitting duty-free import of post-consumer waste as recycling feedstock, would rapidly expand the economics of formal recycling. Third, & most urgently, Bangladesh must treat the EU’s 2026 destruction ban & 2028 DPP deadline not as compliance burdens but as demand signals. Recycled cotton yarn, recycled nonwovens, geotextiles, insulation wadding & upcycled garment components are now products with a legally mandated customer base in Europe. Bangladesh is sitting on the raw material. The question is whether it will build the factory.
Author: Enamul Hafiz Latifee is Chief Research Officer at Bangladesh Textile Today & Deputy Project Manager (Policy, M&E) on the ZDHC-AFD Bangladesh Textile & Apparel Sustainability Project.
