Bangladeshi apparel manufacturers could soon be required to add substantially more domestic value to their products, by as much as 50% in some categories, as the government finalises a new trade framework aimed at curbing dependence on imported inputs and strengthening backward-linkage manufacturing at home.
Among the most significant proposals in the draft Import Policy Order 2026–2029 is a steep rise in the minimum value-addition threshold applicable to garments manufactured using imported raw materials.
According to government officials, manufacturers who fall short of the revised benchmark would forfeit both their entitlement to cash incentives and the duty concessions currently available on imported inputs.
For children’s wear, the minimum value-addition benchmark is set to jump from 15% to 30%. Meanwhile, knitted and woven garments produced from cotton or synthetic fibres would face a threshold increase from 20% to 30%.
Should the measure receive final approval, the wide-ranging trade regulation would remain in force through to December 31, 2029.
Tougher value-addition benchmarks across the board
At present, Bangladesh’s import policy imposes no minimum value-addition obligation on exported goods, with the exception of knitwear, woven apparel and children’s garments.
The draft regulation, however, would extend stricter requirements to a broader range of export categories. Underwear and other garments manufactured from synthetic fibres would need to meet a minimum value-addition level of 40%.
The proposal also includes a prohibition on the import of knitted fabric, a measure that has provoked strong opposition from knitwear manufacturers, who contend that local manufacturing capacity cannot currently satisfy export-driven demand.
Manufacturers push back on tighter rules and import restrictions
Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that although a 30% value-addition target was attainable within the knitwear segment, applying the same standard to woven garments would be impractical given current market realities.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), voiced similar reservations, noting that while the government’s proposed thresholds might be achievable in select instances, prevailing conditions in international markets rendered sector-wide compliance unworkable.
Industry representatives reserved particular criticism for the clause proposing an outright ban on knit fabric imports.
Khan argued that Bangladesh must retain the ability to source specialised knitted fabrics unavailable through domestic production, cautioning that removing this option would significantly undermine the sector’s competitive standing internationally.
Hatem further noted that ending knit fabric imports would necessitate substantial and immediate capital investment in local dyeing capacity, alongside a reliable, uninterrupted gas supply.
He warned that restricting fabric imports risked stalling the industry’s shift toward higher-value knitwear production, stressing that the government currently struggles to guarantee steady gas supply, and broader economic conditions remain unfavourable for major capital spending.
Adjustments to duty-free import allowances
The draft policy additionally revises entitlements linked to export performance under duty-free import arrangements.
“The current allowance permitting imports of up to 50% of the previous year’s export value for garments, woven items and children’s clothing would stay the same,” TBS reported.
For products made from manmade fibres and synthetic underwear, however, the ceiling could rise from 50% to as much as 70%.
Image courtesy: Freepik
