B Mirror Report : The Ministry of Commerce (MoC) has been criticized by leaders of Bangladesh’s two major apparel trade organizations for acting unilaterally to remove bonded-warehouse facilities on yarn imports. They have warned that this move could cause a major crisis for the ready-made garment (RMG) industry.

At a joint press conference on Monday, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) made the accusations, which highlighted the growing trade policy tensions between local spinners and downstream garment manufacturers.

Speaking at the Dhaka event, BGMEA Acting President Selim Rahman said garment exporters who are the primary buyers of domestically produced yarn were sidelined during the decision-making process. “Our views were ignored in discussions with the Tariff Commission, and the decision was taken unilaterally,” he claimed.

Rahman argued that the proposal violates Articles 3 and 4 of the WTO Safeguards Agreement, which require a transparent investigation to show serious injury to local industry before protective measures are imposed. “No such study was conducted,” he said, describing the move as questionable policy.

While acknowledging the government’s aim of supporting local spinning mills, Rahman suggested the sector needs productivity improvements and capacity expansion rather than “artificial tariff protection.” He proposed alternatives such as direct incentives, reliable energy supply, efficiency support, and targeted policy assistance.

Industry leaders stressed that the RMG sector is already under pressure. Garment exports fell 2.63 per cent in July–December FY26 compared to the previous year, and plummeted 14.23 per cent in December alone. “If exporters are forced to buy higher-priced yarn, buyers may cut orders, affecting deemed exporters as well,” Rahman warned.

BGMEA and BKMEA jointly called for withdrawing the proposed curbs, while recommending measures such as direct cash support, energy price rationalisation, corporate tax rebates for spinners, and easier access to low-interest financing to reduce production costs.

The bonded-warehouse facility, in place since the 1980s, has long supported export-oriented garment production and competitiveness. Local mill owners, however, have criticised the scheme, claiming that imported yarn particularly from India is sold at artificially low prices, threatening domestic spinners. The Bangladesh Trade and Tariff Commission (BTTC) reportedly endorsed this view, prompting the Commerce Ministry to recommend withdrawing bonded facilities for certain cotton yarn imports.

BKMEA President Mohammad Hatem said authorities failed to examine the real reasons for rising yarn imports, pointing to reduced cash incentives for local spinners. “If yarn imports are restricted, fabric imports from China which are still cheaper will rise,” he said. Hatem also alleged that India provides various export supports that bypass WTO rules, while Bangladesh has been scaling back its incentives.

BGMEA Director Faisal Samad added that billions of taka in cash incentives owed to local spinners remain unpaid, adding financial stress to the sector. BKMEA Executive President Fazlee Shamim Ehsan warned that buyers will not pay higher prices solely because yarn is Bangladeshi, and rising costs could divert orders to other countries.

Concerns were also raised over implementation. BGMEA Director Abdus Salam questioned how a facility used for nearly four decades could face restriction within just 40 days, while Hatem cited uncertainty over duty refunds and lengthy administrative procedures. ASYCUDA World data showed yarn imports under the bonded facility fell 8.11 per cent year-on-year to 345,577.82 tonnes in July–December FY26, with imports from India down 7.33 per cent to 333,854.49 tonnes.

Responding to the criticism, Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell said some RMG entrepreneurs had misrepresented the spinning sector. He clarified that the Tariff Commission’s recommendation only covers certain yarn counts (10–30) and does not propose new import or safeguard duties.

Russell continued by saying that duty-free yarn mostly helps overseas consumers, while domestic mills must contend with competition from subsidized yarn in nearby nations despite significant investment. He encouraged the government to balance the interests of exporters and spinners, especially as Bangladesh gets closer to graduating from the position of least developed country. He said that local mills have enough capacity to supply the yarns that are suggested for exclusion.

Soon, exporters will have to meet minimum local value addition requirements of at least 40%. Russell stated that in order to safeguard the industry and the overall economy, the government must move quickly.

In order to ensure that Bangladesh retains its competitiveness in the global market while safeguarding home businesses, BGMEA and BKMEA’s unified stance highlights the urgent need for policy measures that support both local yarn producers and export-oriented garment makers.