The government has significantly increased cash assistance for the textile sector, following long-standing demands from businesses in the industry. For the export-oriented ready-made garment (RMG) industry – the country’s main foreign-exchange earner – the Finance Ministry has decided to raise the alternative cash assistance for using domestic yarn or fabric, in place of bonded-warehouse and duty-drawback facilities, from the current 1.5 percent to 5 percent.
Businesses and economists see the decision as a very positive and timely incentive for a sector facing a global economic slowdown and various domestic challenges. It is expected to energize domestic textile mills and give fresh momentum to garment exports.
The Finance Ministry sent a final directive on the matter to the Bangladesh Bank governor on Thursday. According to ministry sources, exporters must submit specific proof of procuring yarn or fabric from domestic sources before availing themselves of the new benefit, which will take effect from July 1 this year.
Earlier, a high-level delegation of the Bangladesh Textile Mills Association (BTMA), led by its president Showkat Aziz Russell, held an urgent meeting with Finance Minister Amir Khasru Mahmud Chowdhury at the National Board of Revenue (NBR) building in Agargaon, Dhaka. The BTMA leaders put forward a six-point demand, including raising cash assistance to 5 percent to encourage the use of domestic yarn and fabric and keep the sector afloat. Greater use of domestic yarn, they argued, would strengthen local industry and save large amounts of foreign exchange.
A review of the sector’s past figures shows that until about two and a half years ago, cash assistance of 4 percent was given against garment exports made with local yarn. As part of Bangladesh’s preparations to graduate from least-developed-country (LDC) status and to align with international rules, the rate was cut to 3 percent in January 2024, and just six months later reduced further to only 1.5 percent – raising the risk of an alarming fall in the use of domestic yarn and fabric.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report