B Mirror Report : A policy rift has emerged between ready-made garment (RMG) exporters and local textile and accessories manufacturers after the government moved to relax restrictions on importing raw materials on a free-of-charge (FOC) basis.

Currently, exporters are allowed to import FOC items including fabrics, trims, accessories, and samples up to 50% of their previous year’s export value. The Ministry of Commerce had decided last month to remove this cap, allowing unlimited FOC imports, but objections from local suppliers have put the plan on hold.

“We had decided to remove the quota for FOC imports, but objections from local suppliers have emerged. We will hold discussions again, possibly next Monday,” said Shibir Bicitro Barua, joint secretary at the Ministry of Commerce, speaking to The Business Standard on 3 December.

RMG exporters argue that removing all restrictions would reduce costs, ease sourcing, and help secure more export orders.

“If my buyer wants to send us raw materials and accessories, why should there be any restriction? Exporting is what matters,” said Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

He explained that when buyers cannot send materials due to the FOC limit, exporters must open back-to-back LCs, which require bank approvals, mortgages, and substantial yearly charges. “If FOC restrictions remain, we might lose additional export orders. Allowing unlimited FOC imports reduces financial risks and increases export potential,” Hatem said.

Exporters also note that FOC imports have risen in recent years as global buyers prefer sending materials directly, reducing sourcing burdens and production risks for garment factories.

Local textile and accessories producers, however, fear that unlimited FOC imports would undermine domestic manufacturing and reduce value addition in the garment supply chain.

The Bangladesh Textile Mills Association (BTMA) and the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) sent letters to the Ministry of Commerce in late November and early December, warning of serious consequences.

In its 29 November letter, BTMA said removing the FOC quota would sharply reduce demand for locally made yarn, fabrics, and accessories, potentially jeopardising $23 billion in investments.

BGAPMEA, in a letter on 3 December, said more than Tk 40,000 crore (over $3 billion) invested in the accessories sector could be at risk. Both organizations stressed that local manufacturers are fully capable of supplying 100% of the accessories required by the garment industry.

The Ministry of Commerce says it will consult all parties before making a final decision.

“We will discuss the matter with all stakeholders, including local suppliers and RMG exporters, to find a balanced solution,” Barua said. A final policy decision is expected after further meetings next week.