Value-addition requirement for garment exports has been raised up to 40 per cent as the government moves to reduce reliance on imported raw materials, strengthen local backward-linkage industries and curb trade-based money laundering.
The government has tightened to rules on value addition to export products in the new import policy.
According to the Import Policy Order 2026-2029, gazette on which was issued Monday by commerce ministry, the government has established structured value-addition benchmarks for the garment and textile sector, setting minimum retention thresholds ranging from 10 per cent to 40 per cent based on product valuation, category, and sourcing methods.
To encourage high-value apparel manufacturing, the policy keeps the reduced 10-percent value addition for woven and knitwear with an FOB price exceeding $60 per dozen under standard back-to-back LCs unchanged, compared to the 30-percent requirement for garments priced below that threshold.
The threshold was 20 per cent for woven and knit garments with an FOB (free on board) price below $60 per dozen.
Children's wear requires a 15-percent minimum value addition under regular LCs, while underwear and synthetic-fibre items carry a 20-percent baseline.
For raw materials imported on a Free-of-Cost (FOC) basis, a uniform 30- percent value addition applies across standard apparel-knit and woven made both from cotton and manmade fibre--while the threshold increased to 40 per cent for synthetic and underwear categories.
Meanwhile, the minimum value-addition requirement for kids' wear has been doubled to 30 per cent from 15 per cent under FoC system.
The value-addition requirement for footwear, leather goods, non-leather footwear and bag, shipbuilding, furniture and aluminum foil per kg (with 5.3 to 6 micron thickness) under standard back-to-back LCs has been set at 20 per cent and under FoC at 30 per cent except furniture which has been fixed at 50 per cent.
Asked about the developments on the trade front, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan said the three trade bodies for textiles and garments -- BGMEA, BKMEA and BTMA--have agreed on 30-percent value addition.
"Higher value addition will help in increasing local raw-material use and flourish the backward-linkages industries here in the country," he told The Financial Express.
SM Khaled, managing director of Snowtex Group, has said for cotton- based garments, 30-percent value addition would not be challenging but for MMF-based garment manufacturing, the threshold might be difficult for many unless uninterrupted utility like gas supply is ensured and backward linkage is not strong enough.
Fazlul Hoque, managing director Plummy Fashions Ltd, feels that the threshold for FoC should be relaxed as buyers at their own cost supply fabrics to manufacturers.
"As a result, there is less possibility of some risks like cancellation, discount or costly air shipment," he notes, adding that 30-percent value addition might not be possible for makers who mostly do basic items in large volumes at comparatively low price.
Talking to the FE, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem criticised the government for fixing 40-percent value addition for undergarments and synthetic fabrics-made garments, saying that the government did not discuss the particular rate with the stakeholders.
There should be no difference between standard LC and FoC, he said, raising question over rationality of the difference.
"FoC system is more secure and there is no scope of not bringing home export proceeds," he said, explaining that closed or partially-closed factories whose loans are already classified can bring raw materials under FoC and earn foreign currency.
This particular policy contradicts government policy to reopen closed factories, he added.
Exporters opine that Bangladesh should encourage MMF manufacturing as the global demand for such items is increasing.
