BTMA urges govt to keep 30% value addition condition for raw material imports

The Bangladesh Textile Mills Association (BTMA) on Saturday called on the government to maintain the existing requirement of 30 per cent value addition for importing raw materials against bank guarantees, saying the measure is vital to safeguarding the country’s textile industry.

Expressing deep concern over the proposed national budget for the fiscal year of 2026-27, which seeks to withdraw this requirement, the association of primary textile mill owners said removing the clause would trigger a massive rise in the abuse of bond facilities and fuel unfair market competition.

The demands were raised at a post-budget press conference organised by the BTMA at the Gulshan Club in the capital on Saturday.

BTMA President Showkat Aziz Russell, former director Rajeev Haider, former vice-president Abdullah Al Mamun, and Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPEA) President Md Shahriar were present at the briefing.

Withdrawing the 30 per cent value addition requirement will push the domestic textile industry towards destruction, the BTMA leaders said.

They also said retaining this condition is absolutely vital to safeguarding local industries and preserving export competitiveness in the post-LDC graduation era.

The association placed a four-point charter of demands before the government to help the struggling primary textile sector survive its current multi-dimensional crisis.

Retaining the 30 per cent value addition condition

BTMA underscored that to retain international tariff benefits in the future, the country’s local value addition rate must be elevated to 40 to 50 per cent or higher.

Therefore, maintaining the 30 per cent condition is indispensable to sustaining domestic yarn and fabric manufacturing and curbing irregularities in bonded warehouses, it said.

Reducing corporate tax to 12 per cent

Terming the existing tax structure “extremely discriminatory”, the BTMA pointed out that while apparel exporters enjoy a 12 per cent corporate tax rate, the effective income tax rate for the primary textile sector stands at a staggering 27.5 per cent.

The association demanded that the corporate tax rate for textile manufacturing units be lowered to 12 per cent and kept effective until June 2030.

Withdrawing 5 per cent duty on polyester staple fiber

The BTMA urged the government to scrap the proposed 5 per cent import duty on polyester staple fiber – the primary raw material used to produce man-made fiber (MMF) yarn and fabrics.

Leaders noted that while man-made fibers account for nearly 70 per cent of global apparel demand, Bangladesh’s exports remain heavily reliant on cotton. Imposing this duty would escalate yarn production costs, severely hurting the spinning sector and hindering export diversification.

Eliminating source tax on export cash to incentives

While welcoming the budget proposal to reduce the source tax on export cash incentives from 10 per cent to 5 per cent, the BTMA demanded a temporary full exemption (zero per cent tax) on source taxes to alleviate the ongoing severe liquidity crunch being faced by exporters.

Addressing the briefing, BTMA President Showkat Aziz Russell criticised the lack of clarity regarding the government’s recently announced Tk60,000 crore economic stimulus package.

“We have not yet seen any roadmap detailing who will receive this money, why, or how it will be disbursed. We have repeatedly told the government that funding sectors with stagnant or low demand will yield no results and will only lead to a waste of public funds,” he said.

Showkat Aziz Russell revealed that Bangladesh imported yarn worth Tk26,000 crore in the fiscal year of 2024-25 alone – a massive demand that could have been entirely met by domestic manufacturers.

He noted that since 2019, at least 234 textile factories have shut down across the country, while many operational mills are currently running at only 60 to 70 per cent of their capacity. Given these dire straits, the textile sector has the strongest claim to the stimulus funds, he added.