FY27 budget promising, but execution crucial

Leaders of the garment and textile sectors have described the national budget for the 2026-27 fiscal year as promising, but said implementation will determine the outcome. 

They also called for long-term policy consistency and stronger collaboration between the government and the private sector to attract new investment, create employment, increase import-substituting production, and boost export earnings.

BGMEA welcomes budget

In an immediate reaction, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan Babu welcomed the overall direction of the proposed budget, saying its focus on investment facilitation and long-term policy stability could support industrial growth if implemented effectively.

“The government had already announced a Tk60,000-crore pre-budget support package, which could deliver positive results if properly utilised,” he said.

He added that employment generation cannot be viewed in isolation, as investment and job creation largely depend on infrastructure readiness.

He pointed to persistent challenges in the energy and power sector, noting that outdated power plants and capacity charge obligations continue to raise business costs. He proposed renegotiating capacity charge arrangements and undertaking reforms in the power sector to help contain electricity prices and improve industrial competitiveness.

The BGMEA president said reducing production and operational costs would encourage fresh investment, expand industry and services, and create new employment opportunities.

BKMEA says implementation will decide outcome

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem said the proposed budget contains several positive measures aimed at supporting investment and employment.

However, he warned that effective implementation and the resolution of structural challenges will determine whether the initiatives deliver the intended results. He noted that incentives for solar energy, medium-term policy commitments, and support for struggling factories are among the encouraging features of the budget.

He added that the budget does not provide sufficiently specific solutions to the country’s gas and electricity shortages, which remain among the biggest obstacles to industrial expansion and new investment.

BTMA seeks further policy support

In a written reaction, Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell described the budget positively, noting its emphasis on investment, production, employment generation, export competitiveness, and ease of doing business.

He said measures aimed at protecting local industries, enhancing competitiveness, rationalising the tariff structure, providing policy incentives for solar energy equipment, and simplifying business procedures are encouraging for the country’s primary textile sector.

He added that several key proposals submitted by BTMA have been partially reflected in the budget. These include reducing the advance income tax (AIT) on export cash incentives from 10% to 5%; lowering the tax rate on recycled products and raw materials from 3% to 1%; treating withholding tax as an advance tax rather than a minimum tax; introducing provisions for refunding excess withholding tax; and reducing withholding tax on cotton supply from 1% to 0.5%.

Other proposals include exempting key solar power equipment imports from customs duties and taxes; setting a minimum customs value for imported fabrics; withdrawing taxes and duties on solar equipment; and extending duty exemptions on chemicals used in effluent treatment plant (ETP) operations until 30 June 2027. He also highlighted that provisions in the Customs Act for establishing free trade zones and initiatives to revive closed mills are commendable.

However, he warned that the proposal to abolish the existing 30% value-addition requirement for importing raw materials under bank guarantees could pose risks to domestic industries and create opportunities for misuse.

“To overcome current industrial challenges, BTMA remains committed to working constructively with the government to build a competitive, energy-efficient, sustainable, and globally competitive textile value chain,” he said.