B Mirror Report : The Ministry of Commerce has recommended cancelling or withdrawing the bond facility on imported cotton yarn to safeguard the interests of domestic yarn manufacturers.
Considering the recommendation of the Bangladesh Trade and Tariff Commission, the ministry has formally requested the National Board of Revenue (NBR) to take necessary steps. A senior official from NBR’s Customs Policy Department confirmed the development on Sunday (18 January).
According to the letter sent to the NBR chairman, the ministry suggested on 6 January that as a short-term measure, imports of 10–30 count cotton yarn should be excluded from the bond facility. The ministry supports the recommendation to protect the local yarn sector. It has also instructed the NBR to take steps to withdraw the bond facility for 10–30 count cotton yarn imports to preserve export incentives, local industry, investment, and employment opportunities. Customs houses have been asked to ensure that the count of imported cotton yarn is clearly specified in the commercial description of import bills of entry.
Sources at the ministry noted that 84% of Bangladesh’s export earnings come from the textile and garment sector, with about 55% generated by knitwear. Since the 1980s, the government has provided duty-free import facilities under the bond system for raw materials for this sector, including yarn for knitwear production. With the growth of the ready-made garment (RMG) industry, domestic entrepreneurs have invested nearly Tk3 lakh crore to establish backward linkage industries, building infrastructure for yarn and fabric production, generating significant employment. Domestic manufacturers are capable of meeting the country’s demand for cotton and blended yarn.
Sources added that domestic yarn producers can supply a significant portion of the raw materials needed for knitwear. The minimum price of 1 kg of 30-count yarn in neighboring countries is $2.93, nearly equivalent to Bangladesh’s production cost. The local market sells yarn at around $2.85 per kg. Meanwhile, neighboring countries provide supportive industrial policies, such as low-cost land, income tax exemptions on sales, special financial incentives for skill development, and infrastructure support, effectively subsidizing yarn by around $0.30 per kg. As a result, they export yarn to Bangladesh at $2.50–$2.60 per kg, below Bangladesh’s production cost by 30–38 cents. Even by increasing efficiency, domestic manufacturers struggle to compete with these subsidized prices, putting local entrepreneurs and investments at risk.
Statistics from various sources show that yarn imports under the bond facility have surged in the past two fiscal years, reducing the sales of domestically produced yarn. Currently, local manufacturers are operating at only 60% of their production capacity, facing significant financial losses. Nearly 50 major domestic yarn producers have already shut down. If imported yarn continues to dominate, more local manufacturers could close, and knitwear producers may increasingly rely on imported yarn. This could reduce the competitiveness of Bangladesh’s garment industry, increase lead times, lower value addition, and deplete foreign currency reserves.
For these reasons, the Ministry of Commerce has recommended immediately excluding 10–30 count cotton yarn from the bond facility.
