BTMA seeks retention of 30pc value-addition rule

Textile millers warn withdrawal could weaken backward linkages, fuel misuse of bonded facilities

FE Team | Published: June 20, 2026 22:34:52

FE REPORT
The Bangladesh Textile Mills Association (BTMA) on Saturday urged the government to retain the existing 30 per cent value-addition requirement for the country's readymade garment (RMG) sector, opposing a budget proposal to withdraw the condition for importing raw materials against bank guarantees.
"If the existing 30 per cent value-addition condition is withdrawn for the import of raw materials against bank guarantees, the risk of misuse of bonded facilities, irregularities and unfair competition in the market will increase," BTMA President Showkat Aziz Russell said.
He made the remarks while addressing a post-budget press conference at Gulshan Club in the capital.
Mr Russell said retaining the condition was crucial for sustaining the country's backward linkage industries, strengthening export capacity in the post-LDC graduation period, and protecting local industries.
The textile millers' concerns stem from a proposal in the FY2026-27 national budget to remove the existing 30 per cent value-addition requirement for exporting goods manufactured from duty-free raw materials imported against bank guarantees without a bond licence.
Responding to a question, the BTMA chief said value-addition thresholds could vary by sector, as raw material requirements and production processes differ across industries.
Despite having substantial local production capacity, Bangladesh imported yarn worth Tk 260 billion in FY2024-25, he noted.
Since 2019, some 234 textile factories have shut down, including 134 spinning mills, he said, alleging that many factories are currently operating at only 60-70 per cent of their capacity due to a range of challenges, including energy shortages.
The BTMA also demanded that the corporate tax rate for the primary textile sector be reduced to 10 per cent and maintained until 2030, from the current 27.5 per cent, to encourage domestic and foreign investment, enhance competitiveness and ensure tax parity within the value chain.
Considering the growing export potential of man-made fibre-based garments, the association also called for the withdrawal of the proposed 5.0 per cent import duty on polyester staple fibre.
Other demands included the complete withdrawal of tax deducted at source on cash incentives.
In the proposed budget, the tax deduction rate on cash assistance has been reduced from 10 per cent to 5.0 per cent.
However, the BTMA welcomed several budget measures, saying they would help promote investment, production, employment, export growth and ease of doing business.
munni_fe@yahoo.com