B Mirror Report:  Business leaders have urged the government to restore the minimum 30% value addition requirement for raw materials imported by non-bonded factories, saying the measure is crucial for.  protecting domestic investment,strengthening the primary textile sector and sustaining export growth.

Bangladesh Textile Mills Association (BTMA) President Shawkot Aziz Russell made the demand in a recent letter to the chairman of the National Board of Revenue (NBR).

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have also backed the proposal.

The organisations said recent changes to the value addition requirement for raw materials imported against bank guarantees could increase risks for local industries.

The primary textile sector is a major backward linkage industry for Bangladesh’s apparel sector, supplying yarn and fabrics to garment manufacturers.

They warned that if local mills fail to meet domestic demand, dependence on imported raw materials will increase, putting additional pressure on foreign exchange reserves. Maintaining the 30% value addition requirement, they said, would encourage local production and help prevent irregularities and potential foreign exchange outflows.

The primary textile sector currently has around 1,883 member companies with investments of nearly US$32 billion. Industry leaders said protecting these investments and maintaining competitiveness in the global market require greater focus on local production and value addition.

The industry bodies have also proposed several tax measures to reduce costs for export-oriented businesses. They want the existing 5% withholding tax on cash incentives to be treated as the final tax liability and sought exemption from tax on the notional 12% interest applied to inter-company loans.

Exporters also called for removing the additional 50% penalty imposed for mistakes in withholding or depositing taxes when such errors are unintentional.

They further proposed keeping the textile sector’s income tax rate at 12% until June 2030 to support long-term investment planning.

They also sought to reduce the document retention requirement under Section 72A of the Income Tax Act from 12 years to three years.

Industry leaders said implementing these measures would help improve textile mill’s production capacity, encourage new investment and restore the competitiveness of Bangladesh’s major export sector amid high interest rates, liquidity shortages and rising operating costs.