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The apparel apex-body BGMEA has demanded the provision of a special incentive in the next budget for non-cotton garment exports.
Such incentive will help woo investment in the backward linkage of woven segment and mitigate post-graduation challenges, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The BGMEA in a letter to finance minister AHM Mustafa Kamal on Sunday sought 10-per cent cash incentive on exports of non-cotton garment items.
"Inflation in major markets, including the European Union and the USA, has reached a record level putting an impact on our domestic sector," cited BGMEA president Faruque Hassan.
"In such a situation, product diversification especially non-cotton based products is strategically important to achieve the target for $100-billion export earnings," he wrote.
Although the country's ready-made garment (RMG) exports reached $45 billion, diversification of goods is hardly being made, he said, adding that reliance on cotton has rather increased over the years.
An estimated 73 per cent of RMG goods exported in the last fiscal year were cotton-based, which was 69 per cent in fiscal year 2008-09.
On the other hand, global consumption of non-cotton RMG is 75 per cent and cotton is 25 per cent, he said.
Mr Hassan said 52 per cent of global garment trade is based on non-cotton garment while 26 per cent of Bangladesh's RMG export is non-cotton items.
Competitor countries have advantages as they can source raw material from their respective local markets.
What is more, after its LDC graduation, Bangladesh will lose duty free market access in the EU.
Bangladesh needs double transformation rules of origin, meaning it has to produce fabric from yarn and garment from that fabric in order to get GSP plus or standard GSP, he explained.
As a result, non-cotton or woven segment will face challenges, the BGMEA chief said, adding: "To overcome the challenges, we need investment in backward linkage, especially woven or non-cotton segment."
Mr Hassan thus demanded special allocation in the upcoming budget for providing 10-per cent cash incentive on non-cotton garment exports.
Incentivising would help boost exports, attract investment and create fresh employment, he argued.