Govt plans to suspend bonded yarn imports

In a move aimed at protecting local textile industries and generating employment, the government has initiated steps to suspend the bonded warehouse facility for imports of 10-30 count yarn.

The Ministry of Commerce has sent a letter to the National Board of Revenue (NBR), citing recommendations from the Bangladesh Trade and Tariff Commission, seeking suspension of duty-free import benefits for these specific yarn counts under the bonded warehouse scheme.

According to sources familiar with the letter sent to the NBR chairman, the proposal -- described as a short-term measure -- recommends excluding 10-30 count yarn from bonded facilities. These yarn counts are among the most frequently imported under the scheme.

The letter also urged customs houses to ensure that yarn count details are clearly mentioned in the commercial descriptions on import bills of entry to prevent misuse.

A senior official from the NBR’s Customs Policy Department confirmed the development on Sunday, saying NBR Chairman Md Abdur Rahman Khan is conducting a multidimensional review of the proposal.

“A final decision will be taken after examining all aspects,” the official said.

BGMEA, BKMEA oppose move

The proposed suspension has drawn strong opposition from apparel industry bodies.

Speaking to the Daily Sun, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Director Mohammed Sohel termed the move “suicidal” for the garment industry.

“If this decision is implemented, garment factories will shut down. Imported yarn is about 40 cents cheaper than local yarn. Even when we receive large export orders, we are forced to import yarn because all varieties are not available locally,” he said.

He added that the sector has been struggling in recent years and warned that local yarn prices would rise further if the decision is enforced.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Fazlee Shamim Ehsan said the association would clarify its position at a press conference on Monday, questioning why the government is proceeding without consulting key stakeholders.

“The government suspended exports through land ports earlier, which severely affected our exports. Now another decision is being taken -- what is the government getting in return?” he asked.

Yarn imports surge

Data from the Bangladesh Textile Mills Association (BTMA) show that yarn imports have increased at an abnormal rate in recent years.

In terms of volume, imported yarn rose 68.32% in FY23 compared to FY22, followed by an 18.4% increase in FY24. Import value rose by 46.53% over the same period.

Bonded facilities are available for 10-30 count yarn under HS codes 52.05, 52.06 and 52.07.

Imports under these categories stood at 35.08 crore kg in FY23, rising to 58.84 crore kg in FY24 and further to 69.71 crore kg in FY25.

According to the Ministry of Commerce, about 84% of Bangladesh’s export earnings come from the textile and garment sector, with knitwear contributing roughly 55%. One of the main raw materials for knit garments, 10-30 count yarn, is largely imported from India.

To promote exports, the government has been allowing duty-free imports of raw materials under the bonded warehouse system since the 1980s.

Meanwhile, domestic entrepreneurs have invested around $3 trillion in backward linkage industries to produce yarn and fabric locally, creating significant employment. Industry insiders claim local producers are now capable of meeting the country’s overall demand for cotton and blended yarn.

Tk12,000cr unsold yarn

BTMA leaders said local spinners are currently burdened with unsold yarn worth about Tk12,000 crore amid rising production costs, warning that the sector is now in “ICU.”

They cited multiple challenges, including cuts in cash export incentives, nearly doubled gas prices, taka depreciation, rising bank interest rates of up to 16%, reduced Export Development Fund (EDF) support, higher wages, and acute working capital shortages.

BTMA also alleged that Indian mills, benefiting from government incentives, are dumping yarn in Bangladesh at prices well below production costs, creating unfair competition and threatening the survival of domestic spinning mills.

BTMA President Showkat Aziz Russell said more than 250 garment factories and over 50 textile mills have already shut down, while more than half of the remaining factories are operating at half capacity.

“One of my own cotton mills has closed. I fear becoming a ‘textile-less’ president,” he said.

According to BTMA estimates, producing one kilogram of yarn in Bangladesh costs about $3, while Indian mills produce similar yarn at $2.85-$2.90 per kg and export it to Bangladesh at around $2.50 per kg.

They said neighbouring countries receive incentives equivalent to about 30 cents per kg through policies such as subsidised land, tax exemptions, skill development incentives and infrastructure support. 

As a result, yarn is exported to Bangladesh at $2.50-$2.60 per kg, 30 to 40 cents below local production costs.

Despite efforts to improve efficiency, domestic producers remain unable to compete with incentive-supported imports, putting local investment and the sector’s long-term sustainability at risk.