To facilitate product diversification, garment exporters and textile millers in Bangladesh have sought that the Government impose value-added tax (VAT) of Taka 3 on the sales of every kilogramme of all kinds of yarns, including manmade fibres or MMF.
Media reports maintained this while adding at present, the rate has been set by the country’s National Board of Revenue (NBR) on sales of yarn made of cotton fibres inside the country even as textile mill owners who produce yarn from manmade fibres have to pay Taka 6 per kilogramme as VAT on sales.
Similarly those who make fabrics from MMF have to pay a 5 per cent VAT at the production level, whereas those using cotton fibres need not, which many feel is a kind of discrimination, barrier towards product diversification and discouraging the MMF importers.
It may be mentioned here that even as countries like India, China, Vietnam, Cambodia, etc., have been performing strong with manmade fibres and their garment exporters have been receiving premium prices from international clothing retailers and brands, Bangladesh is still struggling with basic garment items and lower prices as product diversification within the garment sector has not been taking place, while in Bangladesh local yarn and fabrics manufacturers are very much dependent on cotton fibres — using it in a mix where manmade fibres account for just 20 per cent — even if the international scenario is different as in the global fashion industry, 28 per cent of the mix is cotton fibre.
