The Bangladesh Textile Mills Association (BTMA) has taken a firm stand against a proposed change in Bangladesh's FY2026-27 budget that would eliminate the existing value-addition requirement for raw material imports. BTMA voiced its opposition at a press conference held in Dhaka, warning that scrapping the 30% threshold could carry serious consequences for the country's textile sector.
BTMA's Position on the Value-Addition Requirement
The FY2026-27 budget proposal seeks to remove the rule mandating a minimum 30% value-addition when importing raw materials against bank guarantees. BTMA argues this condition serves as a critical safeguard for the domestic textile industry. The association believes its removal would undermine the policy framework that currently supports local textile production.
BTMA's leadership addressed the media directly to make their concerns clear. They called on budget authorities to retain the existing value-addition clause, citing its role in maintaining fair competition across the sector. The association represents a substantial share of Bangladesh's textile manufacturing base and carries significant policy influence.
Bond Facility Misuse: A Growing Risk
A core concern raised by BTMA is the potential misuse of bond facilities if the 30% threshold is removed. Bond facilities allow manufacturers to import inputs duty-free specifically for export production. Without the value-addition condition, BTMA warns these facilities could be exploited by parties that do not genuinely process or transform the imported materials.
This misuse would create an uneven playing field for manufacturers who invest in real domestic production. Companies committed to value-added processing could face cost pressure from competitors gaming the bond system. BTMA views this as a systemic risk that outweighs any short-term trade facilitation benefit.
Unfair Competition and the Broader Industry Impact
BTMA specifically flagged the risk of unfair competition as a direct outcome of eliminating the value-addition condition. Local mills producing yarn, fabric, and finished textiles through domestic processing would face a structural disadvantage. Importers who bypass domestic value chains could gain a cost edge not grounded in operational efficiency or genuine investment.
Bangladesh's textile industry is a pillar of the national economy, generating substantial export revenue and employment across the supply chain. Policy shifts that weaken domestic manufacturing incentives carry implications well beyond individual businesses. BTMA's public advocacy reflects concern for the wider industrial ecosystem and the competitive integrity of the sector.
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Frequently Asked Questions
What is the 30% value-addition requirement in Bangladesh's textile trade?
The 30% value-addition requirement mandates that manufacturers importing raw materials against bank guarantees must add at least 30% value through domestic processing before export. This condition ensures bond facility benefits are used for genuine manufacturing activity rather than duty-free import and re-export without transformation.
Why is BTMA opposing the removal of this condition in the FY2026-27 budget?
BTMA opposes the change because it believes removal would encourage misuse of bond facilities and create unfair competition against manufacturers that genuinely process materials domestically. The association argues the condition is essential for a level playing field in Bangladesh's textile and apparel industry.
What could happen to Bangladesh's textile sector if this rule is removed?
Removing the value-addition requirement could disadvantage local manufacturers investing in domestic processing while benefiting importers who add little value. Over time, this dynamic could erode Bangladesh's upstream textile supply chain and create structural weaknesses in the country's export ecosystem.
