Prospects of Backward Linkage in RMG sector of Bangladesh: A study ON VINTAGE DENIM LTD.

Abstract

The Ready-Made Garments (RMG) sector is the largest contributor to Bangladesh's GDP, accounting for approximately 81% of export earnings as of the 2018 fiscal year. Despite significant growth since 1978, the industry continues to face critical challenges, particularly in the area of backward linkages. While forward linkage—particularly in production—has advanced considerably, the sector remains heavily reliant on imported raw materials such as fabrics, trims, and accessories, fulfilling only 5–8% of its total demand domestically. This dependency not only increases production costs—redirecting 60–70% of the product cost abroad—but also affects lead time, which is crucial for maintaining buyer relationships and competitiveness in the global market. Using Vintage Denim Ltd. as a case study, this report explores the existing constraints in backward linkage, the implications for production and export schedules, and the urgency of strengthening local material production to sustain the industry's global competitiveness.