Leading textile mill owners and garment accessories manufacturers have strongly opposed the government's reported plan to remove the existing Free of Cost (FoC) import ceiling as part of amending the Import Policy Order 2021-2024, warning that such a move will severely undermine local value addition and put domestic industries at risk.
Buyers currently supply all raw materials, including fabrics, accessories, and other inputs, to local garment exporters under the FoC scheme.
However, the limit is up to 50 per cent of the manufacturer's previous-year export value.
In separate letters to the commerce secretary, the Bangladesh Textile Mills Association (BTMA) and the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA) recently noted that allowing limit-free raw material imports might affect local industries.
If the government accepts the proposed amendment to the import policy order, it will grant garment exporters the flexibility to source all raw materials directly from overseas buyers, process those domestically, and then ship the finished products back to the clients.
The BTMA and BGAPMEA letters said the existing import policy was reportedly under review, with proposals to remove the current FoC limit.
Removing the 50 per cent limit, which allowed exporters to import all their required raw materials free of cost, would deal a significant blow to the country's import-substitution industries, they warned.
On condition of anonymity, a leading apparel exporter told The Financial Express withdrawing the limit could benefit exporters but also carried a high risk of misuse.
He said the scheme also allowed the scope for sourcing trims and accessories from local manufacturers.
Commerce ministry sources say there is going to be a consultation meeting with all stakeholders next week in this regard.
BTMA, representing 1,869 spinning, weaving, and dyeing-finishing mills with investments of around $23 billion, highlighted that the primary textile sector supplied nearly 70 per cent of the raw materials used by the apparel industry and ensured about 30 per cent foreign currency retention.
It stressed that any abrupt policy change allowing unrestricted FoC imports would directly reduce the demand for local yarns, fabrics, and accessories.
BTMA President Showkat Aziz Russell said mills were already struggling with rising interest rates, energy shortages, and currency depreciation, while further pressure from excessive FoC imports could jeopardise the sector.
"Domestic value addition will decline, investments will be threatened, and banks and financial institutions may face heightened risks," he warned in the letter.
The BTMA also rejected claims that lifting the FoC limit could generate an additional $5-10 billion in export earnings, arguing that such growth would bring minimal benefit to the country.
"If these exports occur, exporters will receive only sewing charges - no more than 10 per cent of the product value - and the government will earn no revenue," it said.
A copy of the BTMA letter was also sent to the commerce adviser.
Similarly, BGAPMEA, which represents more than 2,100 accessories and packaging manufacturers supplying 50-60 types of items to the garment and other export sectors, expressed concern that removing the FoC limit would significantly harm bonded accessory makers, resulting in negative spillovers for the readymade garment (RMG) industry.
The accessories and packaging sector, which earned $7.48 billion in deemed exports in FY25 and directly exported $1 billion worth of goods to over a dozen markets, currently meets nearly 100 per cent of the RMG industry's accessory needs.
BGAPMEA President Md Shahriar said lifting the FoC cap would allow buyers to bypass local suppliers, putting at risk around Tk 400 billion in investments and the livelihoods of approximately 700,000 workers.
The association also highlighted long-standing sectoral challenges, including banking hurdles, customs delays, and energy shortages, warning that any further strain could destabilise the industry.
Both BTMA and BGAPMEA urged the commerce ministry not to revise the FoC-related provisions without holding comprehensive consultations with all stakeholders.
They stressed that retaining the existing limit was crucial for protecting domestic value addition, safeguarding employment, and ensuring the continued growth of Bangladesh's textile and allied industries.
Meanwhile, apparel exporters think removing the limit will help boost exports.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Md Shehab Udduza Chowdhury says under the FOC, buyers send MMF fabrics that are not manufactured in Bangladesh.
He says there are no worries for local industries.
The FoC limit withdrawal could earn an extra $5 billion in exports in the first year, which may double within two years, he adds.
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