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The Government has reduced export subsidies for practically all industries to relieve fiscal pressures and encourage exporters to prepare for competing in the global market without state assistance after the country exits the least developed country (LDC) classification in 2026.
Between February and June of last fiscal year, the Government gave monetary support ranging from 1 per cent to 15 per cent of export revenues to boost exporters’ competitiveness in foreign markets. Earlier, the highest rate was 20 per cent.
According to a notice issued by the Bangladesh Bank, the maximum rate of export incentive has been set at 10 per cent and the minimum at 0.3 percent for the fiscal year 2024-25. The financial aid for apparel companies’ export revenues in all markets has been cut in half, from 0.50 to 0.30 per cent.
The payment subsidy for entering new markets has been decreased to 2 per cent from 3 per cent.
The lower export incentive will apply to a variety of sectors, including jute and jute items, leather and leather products, frozen fish, and agricultural products. However, the Government has offered 6 per cent on crust leather exports.
Currently, 43 sectors are eligible for the aid, with the Government spending about Taka 9,025 crore annually in the past three years.
The change occurs as the World Trade Organisation (WTO) classifies monetary incentives as export subsidies.
However, if an LDC becomes a developing nation, it is no longer eligible for cash assistance under the global body’s subsidy and countervailing measures agreement.
Bangladesh is predicted to become a developing country by 2026.
Since February of this year, the country has begun to reduce export subsidies for the first time, and exporters have expressed extreme unhappiness with the drop.