Bangladesh has announced a significant increase in cash incentives for export oriented garment manufacturers that use locally produced yarn and fabric, reinforcing its commitment to strengthening the domestic textile industry and enhancing the global competitiveness of its apparel sector. The revised incentive was introduced through a circular issued by Bangladesh Bank following a directive from the Ministry of Finance.

The policy aims to encourage garment exporters to source more raw materials from local manufacturers instead of relying on imported yarn and fabrics. Industry leaders believe the move will provide much needed support to the country’s spinning mills, which have been facing mounting pressure from rising production costs, including energy, labour and financing expenses.

The enhanced incentive follows repeated appeals by the Bangladesh Textile Mills Association (BTMA), which argued that previous reductions had widened the price gap between imported and locally produced yarn, particularly imports from India. As a result, many exporters shifted towards imported raw materials, placing additional strain on domestic producers.

To qualify for the revised incentive, exporters will be required to provide documentary evidence confirming that yarn and fabric were procured from local suppliers. The Government expects the measure to increase domestic value addition, stimulate investment in the textile industry and strengthen Bangladesh’s backward linkage industries.

Industry representatives have welcomed the decision, describing it as an important step towards improving the competitiveness of Bangladesh’s garment exports while supporting local manufacturing. The initiative is also expected to reduce dependence on imported raw materials and enhance the long term resilience of one of the country’s most important export industries.