Textile mills push for withdrawal of AIT on cotton imports

Leaders of the country's primary textile mills demanded immediate withdrawal of recently imposed 2.0 per cent advanced income tax (AIT) on cotton imports to avert factory closures.

They also urged the interim government to maintain the 15 per cent corporate tax until 2028 and exempt the specific tax of Tk 5 per kg at the production stage on cotton yarn, synthetic and other types of fibers.

Bangladesh Textile Mills Association (BTMA) leaders placed the demands at an emergency press conference held at Gulshan Club in the city on Saturday.

BTMA President Showkat Aziz Russell, who has both textile and fabric mills, said the additional costs will force him to import yarn from India instead of sourcing from his own mill.

"Textile industry is at risk and no mills can survive under such a policy," he said, urging the government to immediately reconsider and reverse the tax and VAT decisions.

"If not, the consequences will be irreparable," he warned, posing question as to whether the government is taking such policy to protect the interest of neighbouring country.

The new tax, coupled with additional VAT burdens, wage hikes and reduced export incentives, comes at a time when mills are passing through a critical time amid a severe gas and electricity crisis, BTMA vice president Saleudh Zaman said.

"If the government does not reverse this decision by Monday (July 07), it will backfire and cotton would remain stuck at Chattogram port," he warned.

The tax, applicable on the import of raw materials such as cotton and man-made fibres, is technically adjustable, he said, adding that in reality, there is no incident of getting back the money once it enters the government's account.

Factory will be closed down due to liquidity crisis, he said, alleging that such measures have taken to cripple the spinning mills.

Echoing the same concern, BTMA director Abdullah Al Mamun said, "Neighbouring countries are offering their industries incentives while Bangladesh is putting pressure on its industries."

He said about 90 per cent of mill owners are looking to sell their factories in the present scenario.

Hossain Mehmood, chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA), said 90 per cent of their members use local yarn and that the impacts of AIT and the rise in corporate tax would be severe.

He expressed doubts about whether cotton imports could be increased under the new US tariff regimes while the 2.0 percent AIT remains in place.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) vice president Amal Podder and Bangladesh Cotton Association adviser Mohammad Ayub also spoke.

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