Bangladesh government has increased the cash incentive for export-oriented garment manufacturers using locally produced yarn and fabric from 1.5% to 5% for FY2026-27, aiming to strengthen Bangladesh’s backward linkage textile industry and reduce dependence on imported raw materials.
According to a Bangladesh Bank circular, the revised incentive will apply to export shipments made between 1 July 2026 and 30 June 2027. Exporters must provide documentary evidence of sourcing yarn or fabric from local manufacturers to qualify for the incentive.
The decision follows repeated requests from the Bangladesh Textile Mills Association (BTMA), which argued that the previous reduction in incentives had made imported yarn more competitive, particularly from India, increasing pressure on local spinning mills. Industry leaders welcomed the move, saying it will support domestic manufacturers facing rising production costs, including higher gas, electricity and labour expenses, while encouraging greater use of locally produced textile inputs.
