Textile millers want value-addition rule retained for raw material imports
Removing the condition to increase misuse of bond facilities and unfair competition in market, it says.
The Bangladesh Textile Mills Association has opposed a proposal in the proposed fiscal 2026-27 budget to withdraw the existing 30% value-addition condition for importing raw materials against bank guarantees.
It warned that the move could undermine domestic textile manufacturing and weaken Bangladesh's export competitiveness.
At a press conference in Dhaka, BTMA leaders said removing the condition would increase misuse of bonded facilities, encourage excessive reliance on imported raw materials and create unfair competition for local producers.
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They argued that the change would also make it harder for domestic mills to retain production capacity at a time when Bangladesh is preparing for graduation from least developed country status.
BTMA President Showkat Aziz Russell said maintaining the 30% value-addition requirement is essential to preserve industrial capacity and sustain export competitiveness.
"Protecting the domestic textile industry does not mean protecting a single sector alone. It means protecting the foundation of the country's export earnings, foreign exchange savings, banking-sector investment, employment, entrepreneurial security and future industrialisation," he said.
Earlier this month, the government issued a statutory regulatory order linked to the proposed budget that removed the minimum 30% local value-addition requirement. Under the earlier September 2025 order, exporters in sectors such as ready-made garments, leather, food processing, steel, plastics and light engineering were required to ensure at least 30 per cent local value addition.
Russell argued that the change could encourage misuse of bonded warehouse facilities and make it more difficult for local mills to retain production capacity.
"Withdrawing the condition would encourage misuse of bonded facilities and unequal competition in the market, making it harder for local mills to remain competitive after Bangladesh's LDC graduation," he said.
The BTMA president added that Bangladesh would need to maintain local value addition of 40-50% or more in order to retain tariff preferences in major export destinations in the future.
Industry stress and capacity concerns
BTMA leaders said the textile sector is already under strain, noting that yarn imports stood at around Tk26,000 crore in FY25 despite sufficient domestic production capacity. They added that around 234 textile mills have shut down since 2019, while many surviving factories are operating at 60-70% capacity.
Russell said a significant portion of imported yarn, particularly from India, could have been produced domestically, and argued that the sector is well placed to benefit from the proposed Tk60,000 crore stimulus package.
However, he said the absence of a clear allocation roadmap raised concerns about the effectiveness of the support measures, warning that poorly targeted stimulus could be wasted.
Position on other export sectors
Responding to questions on the expansion of bond-licence-free, bank-guarantee-based import facilities to wider export-oriented industries, Russell said BTMA's concerns were limited to the textile sector. He said the association was not opposing support for other industries such as leather, electronics, plastics or diversified manufacturing, where backward linkages remain underdeveloped.
He added that policy should be sector-specific, arguing that domestic capacity already exists in textiles and should therefore be prioritised for protection.
Tax, duty and incentive demands
The BTMA also called for a reduction in corporate tax for primary textile mills to 1%, matching the rate for export-oriented ready-made garment manufacturers, and proposed that the rate remain in place until June 2030. Russell said the current effective tax rate of 27.5% for textile mills, compared with 12% for garments, was discriminatory.
The association further urged withdrawal of the proposed 5% import duty on polyester staple fibre, warning that it would increase production costs and hinder export diversification. It also called for the elimination of advance income tax on export cash incentives, arguing that even a reduction from 10% to 5% would not address liquidity constraints in the sector.
