The Bangladesh Textile Mills Association (BTMA) has submitted four key policy demands to the government ahead of the FY2026-27 budget. This is not a routine petition but a systemic effort by the country's primary textile sector to address high raw material costs and intensifying global competition.
The demands focus on reducing import duties on raw materials, expanding local production tax rebates, optimizing export incentive policies, and improving industry financing conditions. Each targets a structural weakness in Bangladesh's textile value chain.
Background
Bangladesh is the world's second-largest garment exporter, but its primary textile segment—yarn and fabric production—relies heavily on imported raw materials. According to industry data, about 70% of cotton and synthetic fiber inputs come from India, China, and Uzbekistan. This structure continuously squeezes garment export margins.
The BTMA's demand to lower raw material import tariffs aims to narrow the price gap between local and imported yarn. Bangladesh currently imposes 5%-15% duties on imported cotton, while competitors like India have lower rates. If implemented, this would directly reduce marginal costs for local spinners.
Industry Impact
Domestically, lower raw material tariffs would reduce government revenue in the short term but could boost capacity utilization in spinning and weaving. Many small and medium mills have cut production due to inverted raw material costs. If the policy passes, yarn capacity utilization could rise from the current 75% to over 85%.
For international buyers, this means Bangladesh's garment cost advantage could strengthen further. The country's FOB export prices are already 10%-15% lower than Vietnam and 20%-25% lower than China. Each 1% reduction in raw material costs could expand garment profit margins by about 0.5 percentage points.
For China, the impact is more nuanced. China is Bangladesh's largest supplier of synthetic fibers and fabrics, exporting about $8 billion annually. If local yarn and fabric production increases due to policy incentives, China's raw material export growth to Bangladesh may slow. However, expanded garment capacity also drives demand for Chinese high-end fabrics and accessories.