Bangladesh cuts import duty on non-cotton fibers to boost textile industry diversification

In a move aimed at diversifying the country's textile exports, Bangladesh has announced a significant reduction in import duty on 18 types of non-cotton fibers. This follows recommendations from the Bangladesh Textile Mills Association (BTMA). Previously, import duties on these fibers ranged from 10 to 31 per cent. The new budget, announced on June 6, reduces the duty to a flat 1 per cent. This policy shift is expected to make it cheaper for Bangladeshi garment manufacturers to import a wider variety of materials, allowing them to produce a broader range of clothing items.

"The government will now offer a 1 per cent import duty on 18 types of non-cotton fibre, down from 10-31 per cent," said Finance Minister Abul Hassan Mahmood Ali during his budget speech. He highlighted the expectation that this policy will "help local textile industries diversify their export basket."

However, industry leaders have mixed reactions to this move. While welcoming it, BTMA president, Mohammad Ali Khokon said the reduction only applies to a limited selection of fibers. The association had advocated for a wider range of 27 fibers to be included. They believe including more fibers is crucial to achieving the government's goal of export diversification.

Despite this, the reduced duty is expected to benefit Bangladesh's garment industry, a major contributor to the country's economy. The industry is heavily reliant on cotton, and this policy change could open doors to new markets and product categories.