The National Board of Revenue has tightened rules for duty-free yarn imports under the bond facility by export-oriented readymade garment factories, suspending the facility for imports of 10–30 count cotton yarn.
However, exporters can import the yarn under a new conditional arrangement by providing bank guarantees, which will be released after repatriation of export proceeds. Yarns of 10–30 count are among the most widely used varieties by local textile and garment manufacturers, accounting for about 60 per cent of total yarn imports.
The revenue board issued a general order on Monday following a decision at the first meeting of an inter-ministerial committee formed to address problems facing the textile industry. The meeting was held on August 20, with commerce minister Khandakar Abdul Muktadir in the chair.
It said the decision was aimed at protecting domestic textile and spinning industries while ensuring genuine exporters could procure raw materials. Textile millers welcomed the move, saying it would protect the domestic spinning sector, prevent misuse of the bond facility and potentially increase revenue from yarn imports.
The Bangladesh Textile Mills Association said the decision would help revive local spinning mills, increase domestic value addition, conserve foreign currency and create jobs. However, garment exporters strongly opposed the move, saying the additional financing requirements would raise production costs and make Bangladesh’s apparel sector less competitive.
The Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association in a joint letter to the commerce ministry on Tuesday demanded immediate withdrawal of the decision, saying it had been taken without consultation with the apparel industry.
The associations said the move would disrupt exports and send a negative signal to foreign buyers. They also alleged that a vested group was trying to create a monopoly in yarn supply amid weak garment export orders and rising local yarn prices.
The garment leaders also questioned the decision-making process, saying the meeting minutes included a proposal to make export-oriented industries source at least 50 per cent of their yarn locally while importing the rest, although the issue was not on the meeting agenda and was not discussed.
BKMEA president Mohammad Hatem said the decision was particularly unwelcome as the government and the RMG sector were already discussing changes to the policy on knit fabric imports.
NBR officials said the issue had been under discussion with the commerce ministry, the Bangladesh Trade and Tariff Commission and other stakeholders for some time to protect domestic industries and prevent misuse of the bond facility.
They said the commerce ministry had recommended the measure during the interim government’s tenure, but it was not implemented. The issue was later finalised by the inter-ministerial committee formed under the current government.
Razeeb Haider Munna, a former BTMA director, said the decision followed a top-level government directive and took into account its impact on revenue collection and the backward and forward linkage industries. He said the move could strengthen local spinning mills by increasing demand for domestically produced yarn.
‘The initiative would help the country meet the European Union and United States two-stage transformation and 40–60 per cent value-addition requirements, ensuring continued market access after LDC graduation under the GSP-plus regime,’ he said.
To obtain the release of bank guarantee, exporters would have to submit a certificate from the relevant trade body, such as the BGMEA, BKMEA or BTMA. As a result, bonded export-oriented factories will now have to follow the same process as non-bonded factories to import raw materials against bank guarantees. BGMEA president Mahmud Hasan Khan and BKMEA president Mohammad Hatem demanded the immediate withdrawal of the decision.
