Leaders of the country's two main apparel trade bodies have blamed the Ministry of Commerce (MoC) for making a unilateral move to withdraw bonded-warehouse facilities on yarn imports.
They warned that such a decision could push Bangladesh's ready-made garment (RMG) industry into a serious crisis.
The proposed restriction, aimed at curbing imports and protecting local spinners, ignores the concerns of exporters at a time of slowing global demand and rising cost pressures, they argued.
The allegations were made on Monday at a joint press conference organised by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), underscoring a deepening rift between upstream spinners and downstream garment manufacturers over trade policy.
Speaking at the press conference in Dhaka, BGMEA Acting President Selim Rahman said that although garment exporters are the sole buyers of domestically produced yarn, their interests were ignored while taking such a sensitive and far-reaching decision.
"During discussions with the Tariff Commission, our views were sidelined, and the decision was taken unilaterally," he claimed.
Mr Rahman further argued that the move violates Articles 3 and 4 of the World Trade Organization's Safeguards Agreement, which require any protective measure to be preceded by a transparent and impartial investigation demonstrating serious injury to local industry.
"No such investigation was conducted in this case," he said, describing the proposal as questionable from a policy standpoint.
While acknowledging the government's stated objective of protecting local spinning mills, Rahman said the sector needs productivity upgrades and capacity enhancement rather than what he termed "artificial tariff protection".
He suggested alternative measures such as direct incentives, uninterrupted energy supply, improved efficiency support and targeted policy assistance.
Export performance, he warned, is already under pressure. Garment exports declined by 2.63 per cent during July-December of FY26 compared to the same period a year earlier, while exports fell sharply by 14.23 per cent in December alone.
"If exporters are forced to buy higher-priced yarn, buyers will cut orders. This will also hurt deemed exporters," he added.
From the press conference, BGMEA and BKMEA jointly called for the withdrawal of the proposed curbs and outlined alternative support options for the textile sector.
These included direct cash assistance, special incentives, reliable gas and electricity supply, rationalised energy prices, corporate tax rebates for export-oriented spinners and easier access to low-interest financing to reduce production costs.
Industry leaders noted that since the 1980s Bangladesh has allowed duty-free bonded imports of yarn to support export-oriented garment production and maintain global competitiveness. Local mill owners, however, have long criticised the facility, arguing that neighbouring countries export yarn to Bangladesh at artificially low prices, threatening the survival of domestic spinners.
The Bangladesh Trade and Tariff Commission (BTTC) has broadly supported this view, prompting the Commerce Ministry to recommend withdrawing the bonded facility for certain cotton yarn imports, particularly from India.
BKMEA President Mohammad Hatem questioned why the authorities failed to examine the underlying reasons for rising yarn imports, pointing to reductions in cash incentives for local spinners as a key factor.
"If yarn imports are restricted, fabric imports from China -- still cheaper than locally produced fabric -- will increase," Mr Hatem warned.
He also alleged that India provides various forms of support to its exporters that effectively bypass WTO rules, while Bangladesh has been scaling back incentives for its own industries.
BGMEA Director Faisal Samad said local spinners are entitled to cash incentives as deemed exporters, but payments worth billions of taka remain stuck, adding to financial stress in the sector.
BKMEA Executive President Fazlee Shamim Ehsan questioned whether local mills consistently supply yarn of the quality required by international buyers.
"Buyers will not pay higher prices simply because exporters are Bangladeshi. Higher costs will push orders to other countries," he said.
Concerns were also raised about implementation.
BGMEA Director Abdus Salam asked how a facility used by the apparel sector for nearly four decades could face restriction within just 40 days.
Mr Hatem highlighted uncertainty over duty refunds, noting that upfront payments require significant capital and that duty drawback processes often take up to two years, creating high financing and administrative costs.
Citing ASYCUDA World data, Ehsan said yarn imports under the bonded facility fell by 8.11 per cent year-on-year to 345,577.82 tonnes during July-December of FY26.
Imports from India also declined by 7.33 per cent to 333,854.49 tonnes over the same period, suggesting subdued demand and ongoing efforts to curb imports.
However, he noted that Indian yarn remains competitive due to lower production costs, while import duty rates range from 33.63 per cent to 39.75 per cent.
"Export-oriented industries worldwide enjoy duty-free access to raw materials," Ehsan said. "If Bangladesh restricts this facility, buyers will simply move orders elsewhere."
Responding to the criticism, Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell said in a statement that some RMG entrepreneurs had presented inaccurate information about the spinning sector.
He said the Tariff Commission submitted its report to the Commerce Ministry only after holding discussions with BTMA, BGMEA and BKMEA, following a formal application from BTMA.
Mr Russell clarified that the recommendation was limited to excluding yarn of counts 10 to 30 (HS codes 5206, 5207 and 5208) from bonded facilities, and that there is no proposal to impose new import or safeguard duties.
He argued that duty-free yarn imports mainly benefit foreign buyers rather than domestic manufacturers, while local spinners -- despite billions of dollars in investment -- are struggling due to subsidies of around 50 cents per kilogram in neighbouring countries.
He added that domestic mills have full capacity to supply the yarns proposed for exclusion and said earlier discussions had seen broad agreement that locally producible yarn could be kept outside bonded facilities.
"These agreed positions are now being ignored, and the issue is being portrayed as unilateral, which is undesirable," he said.
With Bangladesh set to graduate from least developed country status, Russell noted that exporters will need to meet minimum local value addition thresholds of 40 per cent or more.
He expressed hope that the government would act swiftly to balance the interests of spinners and exporters and safeguard the wider economy.
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