The Bangladesh Textile Mills Association (BTMA) has formally requested a three-year extension for the cash incentives associated with export earnings, citing significant financial pressures within the country’s textile industry.
In a communication sent to the finance secretary, Showkat Aziz Russell, the BTMA president expressed that exporters are facing challenges due to currency fluctuations, elevated costs for raw material imports, and frequent energy supply disruptions. These issues have impacted profit margins and diminished the operational efficiency of mills, as reported by local media.
BTMA emphasized that the Bangladesh textile industry represents around $23 billion in private investment, acting as a cornerstone in the apparel value chain. The industry supplies about 70% of the raw materials needed by garment manufacturers and is responsible for approximately 85% of the country’s export revenues, with textiles alone accounting for nearly 30% of foreign exchange earnings.
According to the association, the cash incentive mechanism outlined in Bangladesh Bank’s Foreign Exchange Circular No 28, which is set to expire on December 31, 2025, has provided necessary stability for export-focused producers. BTMA argues that extending this program until December 2028 would help maintain competitiveness, especially as global demand fluctuates and production costs rise.
The association pointed out various challenges both domestically and internationally, including ongoing geopolitical tensions, slower economic growth worldwide, sharp increases in gas tariffs, and a 70% increase in labor wages. Additionally, ongoing shortages of gas and electricity have hampered factory productivity, resulting in excess unsold yarn inventory and reduced output in several mills.
In a separate appeal, the BTMA has urged Bangladesh Bank to extend the import credit facility for industrial raw materials beyond its current expiration in late 2025. The existing foreign exchange circulars provide a maximum credit period of 180 days, which BTMA argues does not reflect the actual conditions faced by the industry.
Producers explained that the process from importing cotton to receiving payments for exports usually spans 270 to 300 days, which necessitates a longer financing window to ensure liquidity and mitigate supply chain interruptions. BTMA warned that without relief on both export incentives and import credit, the Bangladesh textile industry could struggle to support garment exports adequately.
