Govt, exporters, textile millers agree to boost incentives

Government officials, readymade garment (RMG) exporters and textile millers have reached a consensus on increasing incentives for the use of locally produced yarn in export-oriented garment items, alongside additional support for apparel exports.
The consensus was reached at an evaluation meeting of the finance ministry's technical committee on yarn import issues, held at the Secretariat on Monday afternoon. The meeting was chaired by Dr Rahima Khaton, head of the committee and joint secretary of the Economic Relations Division (ERD).
During the meeting, RMG manufacturers and textile millers proposed raising cash incentives to boost the competitiveness of the local spinning industry and encourage greater use of domestic yarn in garment exports.
According to sources present at the meeting, the committee discussed increasing the incentive for using local yarn to between 3.5 per cent and 5.0 per cent from the existing 1.5 per cent, arguing that such a move would help reduce import dependence and strengthen the competitiveness of domestic textile mills.
Industry representatives also sought a 1.0 per cent cash incentive for apparel exporters to help them remain competitive in the global market.
The technical committee is expected to submit its report by February 16 after assessing the impact of the proposed options on the textile and apparel value chain, including competitiveness, export performance and the sustainability of local spinning mills, sources said.
Before finalising the report, the committee will analyse the fiscal cost of the additional incentives and their potential impact on exports and employment.
The 10-member technical committee includes representatives from the Ministry of Finance, the Ministry of Commerce, the Bangladesh Textile Mills Association (BTMA), the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
The meeting was attended by representatives from the Ministry of Commerce, the National Board of Revenue (NBR), Bangladesh Bank, the Export Promotion Bureau (EPB) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
Among industry leaders present were BTMA President Showkat Aziz Russell, BGMEA Vice-President Shehabuddoza Chowdhury and BKMEA Vice-President Mohammad Rashed. Textile entrepreneurs Md Badsha Mia, managing director of Badsha Group, and Engr Razib Haider Munna, managing director of Outpeach Textiles Mills, also attended the meeting.
After the meeting, BGMEA Vice-President Shehabuddoza Chowdhury said raising the incentive to 5.0 per cent would make locally produced yarn commercially viable for RMG exporters.
"If the incentive is increased, RMG manufacturers would no longer need to import yarn for a marginal price advantage, which would significantly improve the competitiveness of domestic textile mills," he said.
However, he noted that the government has expressed concerns about its fiscal capacity, adding that even an increase to 3.5 per cent would create pressure on public expenditure.
He also said higher incentives could help revive a large number of idle factories -- around 350 RMG units and nearly 50 textile mills -- bringing them back into operation. This would generate employment and increase tax and revenue collection, ultimately benefiting the government, he added.
While textile mill owners have long demanded the withdrawal of bonded warehouse facilities for yarn imports, RMG manufacturers said such a step would no longer be necessary if the incentive is raised to 5.0 per cent.

newsmanjasi@gmail.com