Govt weighs cash incentives for local yarn, bonded import rules via committee
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The Ministry of Finance has formed a technical committee to identify and evaluate policy options to address the ongoing yarn issue involving local spinners and garment exporters, meeting sources said.
The committee has been tasked with assessing three possible cash incentives for local yarn and excluding bonded facility for yarn imports and submitting its recommendations within the next 10 working days.
Under the proposals now being reviewed, the government may de-bond yarn imports while providing a 5 per cent cash incentive to readymade garment (RMG) exporters for using locally produced yarn. Another option under consideration is providing a 10 per cent cash incentive to local spinning mills along with a 3 per cent incentive for RMG exporters. A third option involves offering a direct 10 per cent cash incentive exclusively to local spinners.
Earlier, the commerce ministry sent directives to the NBR to exclude 10–30 count yarn imports from the bonded warehouse facility in order to protect local spinners. After that apparel exporters increase their concerns as that will be affected on the industry as it will increase their cost of productions.
To evaluate the financial, operational, and supply-chain implications of these options, the ministry has constituted a technical committee headed by ERD Joint Secretary Dr Rahima Khaton. The committee will examine the impact of each option on the textile and apparel value chain, including competitiveness, export performance, and the sustainability of local spinning mills.
The decisions were taken at a meeting held at the Ministry of Finance on Tuesday, presided over by Finance Secretary Dr Khairuzzaman Mozumder, with participation from key government officials and industry stakeholders.
Those present included Commerce Secretary Mahbubur Rahman, National Board of Revenue Chairman Abdur Rahman Khan, and Textiles and Jute Secretary Bilkis Jahan Rimi, along with representatives from the Bangladesh Textile Mills Association (BTMA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Industry insiders said the move reflects the government’s effort to strike a balance between protecting local spinning mills from pressure caused by bonded yarn imports and supporting garment exporters facing weak global demand, rising production costs, and tight delivery timelines.
The issue of duty-free yarn imports under the bonded warehouse system—particularly low-count yarn—has long been a point of dispute between spinners and apparel exporters. While spinners argue that unrestricted bonded imports have reduced their market share and led to idle capacity, exporters maintain that bonded imports are critical for timely shipment and access to specific yarn varieties.
Officials said the final policy decision will be based on the technical committee’s findings and fiscal feasibility, after which the ministry will determine the appropriate financing mechanism for the selected incentive structure.