Export-focused textile and clothing businesses in Bangladesh have criticised the Government’s decision to withdraw cash incentives for a significant portion of garment products, deeming it illogical amidst the sector’s struggle with various challenges such as a gas crisis and escalating business costs.
On 30th January, the Bangladesh Bank issued a circular reducing cash incentives for exports across 43 categories for the fiscal year 2023-24. Notably, readymade garment products under five HS headings—6105, 6107, 6109, 6110, and 6203—were excluded from the export subsidy.
Exporters argue that the unilateral decision by the Bangladesh Bank, made without stakeholder consultation, could lead to disaster for the textile and clothing industry.
They pointed out that export orders for readymade garments have already declined by 20 per cent due to global economic slowdown, while yarn production in spinning mills has dropped to 30-40 per cent due to severe gas shortages.
However, the Bangladesh Bank defended its decision by citing the government’s plan to gradually reduce cash incentives ahead of the country’s graduation from least developed status in 2026, when export subsidies will be prohibited under World Trade Organization provisions.
