Uzbekistan is looking to boost its manufacturing and industrial sectors, while progressing from a focus on the extraction of raw materials to a more sophisticated, value‑added production model. Thanks to ongoing government reform and support on the industrial modernisation front, as well as the country’s abundance of natural resources, Uzbekistan is well‑positioned as a production base for overseas companies, particularly those engaged in light industry manufacturing. In addition, Uzbekistan has officially committed to acceding to the World Trade Organization (WTO) by the end of 2026, a move that will enhance the country’s integration into international trade flows.

Light industry – development focus

On 19 September 2025, the President of Uzbekistan signed a decree establishing the Agency for the Development of Light Industry under the auspices of the Cabinet of Ministers. Among the agency's primary objectives are the modernisation and technical enhancement of light industry enterprises – in particular, those in the textiles, leather or silk sectors – as well as the expansion of production to meet international standards.

In addition, the Agency also has responsibility for promoting exports, exploring new markets, attracting investment, supporting innovative projects, and improving the system for training specialists within the sector. Through a combination of these measures, the agency aims to ensure the sustained growth and increased global competitiveness of Uzbekistan’s light industry.

Long a cornerstone of Uzbekistan’s economic transformation, the manufacturing sector serves as one of the country’s primary drivers of GDP growth, reform, (foreign direct investment) FDI flow, and transition to a more value‑added model. Between 2020 and 2024, total manufacturing output (gross production volume) rose from UZS305.9 trillion (US$29.2 billion) to UZS745.1 trillion (US$57.7 billion)[1], representing a compound annual growth rate (CAGR) of 24.9% in Uzbekistan Som terms.

In general, the country’s light industries have evidenced robust growth momentum. Output in the textile subsector, for instance, grew from UZS36.7 trillion (US$3.50 billion) in 2020 to UZS89.5 trillion (US$6.93 billion) in 2024, while the gross production volume of the apparel sector increased from UZS10.4 trillion (US$0.99 billion) in 2020 to UZS31.9 trillion (US$2.47 billion) in 2024. Alongside this, output in the leather and related products industry climbed from UZS1.6 trillion (US$157 million) in 2020 to about UZS4.1 trillion (US$320.5 million).

In many ways, these outcomes reflect Uzbekistan's particular emphasis on vertical integration, modernisation, and export‑led growth. This saw it prioritise transforming raw material advantages to higher‑value manufactured goods, creating employment (hundreds of thousands of jobs across these sectors), and establishing the country as a highly competitive light‑industry relocation hub.

Specialised Industrial Zones across multiple light industry sectors

The Uzbekistan 2030 Strategy designates expanding manufacturing capacity, industrial upgrading, and the optimal utilisation of regional potential as core drivers of economic growth. As of 1 January 2026, Uzbekistan has been home to 31 Special Economic Zones (SEZs), 423 Small Industrial Zones (SIZs), 32 technoparks and 361 clusters where enterprises have been granted participant status[2].

Such efforts aim to boost value‑added production, exports, employment, and FDI by creating a dedicated ecosystem that integrates raw material processing, modern equipment, and export‑oriented production facilities.

Two Presidential Decrees signed in May 2024 (one focusing on advancing the textile, sewing, and knitwear industry, and the other on promoting the leather, footwear, silk‑weaving, and carpet industries) clearly indicate the Uzbek Government’s commitment to developing SIZs/clusters for the textile and garment, leather and footwear industries.

While the exact benefits on offer may vary across different zones and industries, discounted credit lines, import duty exemptions/reductions, infrastructure support, and other business incentive packages (including incentives related to corporate income, value‑added tax, and land taxes) are often made available to would‑be SEZs and SIZ investors. Among other supportive state initiatives available to investors are the provision of wastewater treatment facilities for textile dyeing plants and subsidies for the implementation of international standards and certifications.

Establishment of Industry Associations

A key pillar of Uzbekistan's approach to bolstering the professionalism of its light industries is the establishment of dedicated, state‑supported industry associations. Such organisations have been tasked with coordinating sector development, facilitating collaboration, and driving international integration.

Following a Presidential Decree, the Association of Textile and Garment Industry Enterprises of Uzbekistan (Uztekstilprom) was established in 2017. In 2018, this was followed by the launch of the Association of Leather, Footwear and Fur Enterprises of Uzbekistan (Uzcharmsanoat). These two non‑governmental (but government‑backed) associations serve as centralised platforms for their respective industries, with voluntary membership extending to a wide range of enterprises, from large clusters and manufacturers to SMEs.

Acting as intermediaries between enterprises, government bodies (such as the Agency for the Development of Light Industry), and their relevant international partners, these associations are playing pivotal roles in Uzbekistan's shift to high‑value manufacturing. Together, they help domestic producers align with global standards, explore export opportunities, and resolve operational challenges (e.g. liquidity support, certification assistance), while amplifying the country's appeal as a relocation destination for light‑industry production – particularly in the textile, garment, leather goods, and footwear sectors.

Uzbekistan’s advantages as a manufacturing production base

Preferential trade access to major markets

As of April 2021, Uzbekistan has been a beneficiary of the European Union's Generalised Scheme of Preferences Plus (GSP+), with this status set to extend until at least 2027. Uzbekistan also enjoys Enhanced Preferences under the United Kingdom's Developing Countries Trading Scheme (DCTS), providing preferential access to another of the world's largest high‑income markets.

Under both schemes, Uzbek‑manufactured products (particularly from such labour‑intensive sectors as textiles and garments, leather goods, footwear, and related industries) qualify for duty‑free or significantly reduced‑tariff access. With tariffs, accordingly, eliminated or slashed (often by as much as 8‑17% under standard Most Favoured Nation rates), this dramatically enhances the cost competitiveness of such items.

Although Western markets (including the EU and the UK) only account for a relatively modest share of Uzbekistan's total exports, the preferential arrangements in place allow Uzbek goods to enter such markets at a highly competitive price, with the majority of eligible lines often exempt from any tariff. This entitlement has already driven notable export growth (especially with regard to textiles, apparel, and processed leather products), an outcome that has underpinned Uzbekistan's shift toward higher‑value manufacturing and economic diversification. More specifically, Uzbekistan’s apparel and clothing accessory exports (HS 61 and 62) to the UK and the EU more than tripled between 2020 and 2024.

It is also worth noting that the EU's GSP+ regime is conditional on compliance with 27 international conventions relating to human rights, labour standards, environmental protection, good governance, and sustainable development. By linking trade preferences to such commitments, the scheme not only promotes economic growth but also encourages the adoption of sustainable and responsible practices in Uzbekistan and other developing nations.

Looking beyond Europe, the economic reforms necessary for Uzbekistan’s accession to the World Trade Organization (WTO) are said to be progressing constructively[3]. During a 9 March 2026 meeting of the Working Party on the Accession of Uzbekistan, Deputy Prime Minister Jamdhid Khodjaev confirmed the country’s dedication to securing membership by the end of the year. Such a move is expected to help drive Uzbekistan’s long‑term economic growth and modernisation, while enhancing the country’s alignment with global trade flows.

Low labour costs

Uzbekistan’s comparatively low labour costs also make it an especially attractive destination for relocating labour‑intensive manufacturing operations. As of February 2026, the national minimum monthly wage was UZS1,271,000 (approximately US$105). In 2025[4], the average wage for a worker in the manufacturing sector was UZS7,214,200 (US$600). With the largest population in Central Asia (about 37 million), Uzbekistan’s workforce is both substantial and youthful. In addition, the Labour Code of Uzbekistan specifies a standard adult workweek of 40 hours, providing a clear framework for any overseas enterprise operating in the country.

Abundant natural resources

Uzbekistan’s plentiful energy, agricultural and livestock resources equate to a stable and competitive cost base for such resource‑intensive industries as textiles, apparel, leather goods and footwear. This, again, strengthens the country’s appeal as a preferred manufacturing base.

With regard to stable and economical energy sources, Uzbekistan is one of the leading producers of hydrocarbons, while also having substantial reserves of natural gas and oil. The abundance of hydrocarbons, in addition to state natural gas subsidies, translates into competitive utility prices for businesses, something that significantly reduces operational costs. The related financial benefits are especially advantageous for such energy‑intensive processes as textile spinning, dyeing, leather tanning, and garment finishing, ultimately delivering higher margins and ensuring greater global price competitiveness.

Long one of Central Asia’s major cotton‑producing nations, Uzbekistan now ranks among the world’s top ten cotton producers. In 2025/26, it was estimated that the country produced 670,000 metric tons of cotton lint, positioning it as a reliable source of high‑quality cotton. Domestically harvested cotton is now predominantly processed within the country. This is seen as supporting vertical integration across the relevant textile clusters, while reducing supply chain vulnerabilities and input costs for relocated manufacturers, and ensuring a steady supply of local feedstock for value‑added production.

The country’s significant livestock sector, meanwhile, underpins its robust supply of raw hides and skins. In 2024, livestock production stood at more than 2.9 million tons, with the required cattle, sheep, and other herds all continuing to expand. This has generated substantial volumes of raw hides suitable for tanning and processing into leather goods, footwear, bags, or accessories. The scale of the domestic supply has also played a key role in reducing import dependency and lowering raw material costs, a development welcomed by the many footwear and leather manufacturers prioritising vertical efficiency.

Textile and garment sector development

The Uzbek textile industry, particularly its cotton‑based segment, has undergone a profound transformation in recent years. This has largely been driven by government reforms aimed at resolving longstanding problems and prioritising value‑added production.

Back in 2011, more than 330 international brands and retailers supported a boycott of Uzbek cotton products in response to widespread reports of child labour and forced labour during the annual cotton harvest. This collective action, combined with sustained international pressure from such organisations as the Cotton Campaign, led to the Uzbek government launching a comprehensive reform programme. This included moves to eliminate systemic forced and child labour, improve working conditions, enhance worker protections, and establish traceability systems for licensed cotton across the supply chain.

Following such significant progress, the boycott was lifted in 2022. To demonstrate its ongoing commitment to modernising its cotton industry, while eradicating labour abuses and adhering to international sustainability standards, Uzbekistan became a Better Cotton Initiative (BCI)[5] partner in July 2023.

In addition to these labour and sustainability reforms, the government has prioritised a shift from raw material exports to domestic production and high‑value manufacturing. From 2020 onwards, Uzbekistan has effectively phased out raw cotton exports by liberalising the sector (abolishing state quotas and mandatory sales in 2020) and prioritising domestic processing into yarn, fabrics, and garments.

By 2023, about 100% domestic conversion of cotton lint into higher value‑added products had been achieved, with raw cotton exports dropping to negligible levels. Today, virtually all of Uzbekistan’s cotton is processed within vertical cotton‑textile clusters – integrated entities that span farming, ginning, spinning, weaving, and garment production. This is seen as having boosted efficiency and productivity, while facilitating comprehensive integration into premium global value chains.

Looking ahead, Uzbekistan aims to move further up the value chain by expanding its finished garment and synthetic fibre production capacity, while also nurturing a number of Uzbek brands. In combination, this is intended to position the country as both a low‑cost manufacturing hub and a responsible, sustainable supplier. Ultimately, it is believed that this will enhance its attractiveness for any international brand seeking a diversified, compliant supply chain in a labour‑intensive light industry.

Leather and footwear industry development

Leveraging the country’s robust livestock industry and abundant supply of raw hides, Uzbekistan’s leather and footwear sector is seen as having high potential for production relocation. With its substantial herds of cattle, sheep, and other livestock generating substantial volumes of hides annually, the sector has long benefited from a steady, domestic supply of high‑quality raw materials.

Over recent years, related production has maintained robust growth. In 2024, for example, the total output of the leather and related products industry was valued at UZS4.1 trillion (US$318 million). With primary products accounting for most of its exports and finished goods only accounting for about 30%, it can be taken that Uzbekistan still only has limited leather (and related products) manufacturing capacity.

Currently, most production takes place in the Andijan and Ferghana regions, with other leather‑harvesting regions having relatively low production rates. This highlights considerable future potential for the better utilisation of the leather harvests in such regions.

At present, the Uzbek government is taking a dual approach to enhancing the leather industry’s added value capacity. Firstly, it is looking to interest international brands in setting up production lines in the country as a means of bringing in investment, manufacturing technology and expertise. Secondly, it has committed to globally promoting the Made in Uzbekistan brand of leather goods.

Challenges amid strong prospects

With its proactive government reform programme, abundance of natural resources, and potential advantages as a light‑industry production base, Uzbekistan clearly has growing appeal. Despite this, there are, however, a number of challenges that merit bearing in mind.

Infrastructure and facility gaps in raw material utilisation

Most notably, although the country is rich in such natural resources as cotton and raw hides, full exploitation of these items has historically been constrained by outdated facilities, limited automation, and inadequate traceability/accounting systems. Inefficiencies in terms of processing, storage, and quality control, for instance, have led to underutilised raw materials and a reliance on partial imports (e.g. for certain cotton fibre needs). In order to counter this, the government and the private sector have initiated significant digital and infrastructural upgrades, including the rollout of the Agroplatforma system[6] – a comprehensive digital platform designed to deliver agricultural traceability, supply chain management, and transparent transactions across the cotton and other related sectors. Similar traceability efforts have also been adopted within the country’s leather industry.

Environmental, sustainability and compliance standards

Compliance with increasingly stringent international requirements relating to sustainability, labour rights, and environmental protection is now essential for any overseas company looking to relocate to or source from Uzbekistan. This is particularly important when it comes to both maintaining preferential market access via the EU’s GSP+ scheme and meeting buyer expectations in terms of ethical supply chains.

To date, the legacy of the 2011‑2022 cotton boycott, combined with the country’s GSP+ obligations, has driven substantial progress. This has seen forced/child labour eliminated when it comes to cotton harvesting, while sustainable practices have been implemented in multiple cotton farms and partnerships with such international organisations as the BCI entered into by many clusters.

A number of emerging regulations, such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), however, impose mandatory human rights and environmental due diligence across global value chains for any large company looking to sell into the EU. At the same time, various other disclosure and sustainability requirements also require transparent supply chain reporting. For its part, Uzbekistan is looking to meet such expectations by subsidising international certifications, enforcing traceability reforms (e.g. the implementation of the Agroplatforma system), introducing cleaner technologies and strengthening labour inspections and worker rights. That said, full compliance still demands ongoing investment from firms looking to relocate and domestic manufacturers in three key areas:

1) Cleaner production technologies (e.g. low‑water dyeing, advanced tanning/wastewater treatment to address pollution and water scarcity

2) Labour training and acceptable work environment programmes

3) Continuous monitoring, auditing, and adaptation to evolving domestic enforcement and international standards

Conclusion

Overall, it is clear that interest in Uzbekistan's light industries will continue to grow among Eastern and Western companies and investors. Most notably, the country’s garment, leather, and footwear sectors have already attracted substantial overseas investment (including backing from both the Chinese Mainland and Germany) with regard to setting up sourcing and production bases.

Such developments underline Uzbekistan’s evolving standing as a competitive and attractive destination for global light industry investment. To that end, the country’s ongoing reforms, commitment to sustainability, and drive towards higher value‑added production directly appeal to international brands, while also facilitating the creation of resilient, diversified supply chains. Although, admittedly, a number of limitations hindering light industry development remain in place, continuous investment inflows and ongoing government support are ensuring steady progress.

As Uzbekistan continues to foster partnerships with overseas brands, while expanding its domestic manufacturing capabilities, it is well‑placed to integrate further into many of the leading global markets. This will see it enhance its economic value and reinforce its stature as a highly responsible supplier of premium, quality goods.

[1] Source: Stat.uz

[2] Source: Stat.uz

[3] Source: https://www.wto.org/english/news_e/news26_e/acc_09mar26_316_e.htm

[4] Source: Stat.uz

[5] Better Cotton Initiative (BCI) is the largest cotton sustainability programme in the world. It is a global non‑profit organisation that aims to make cotton production better for the people who produce it, better for the environment and better for the sector’s future development.

[6] Source: https://agroplatforma.uz/#