BTMA seeks 100% duty exemption for all types of fibres

Key demands

• Duty-free import facility for more than 20 types of fibres

• Continuing the 15% corporate tax rate facility until 2026

• Reducing duties on textile instruments import to 1%

• Cutting VAT on locally produced yarn to Tk3 per kg

• Increasing govt-set wastage rates in yarn production

The Bangladesh Textile Mills Association (BTMA) has sought 100% import duty exemption for any types of fibres as the global demand for diversified clothes has been on the rise.

"Nowadays, our foreign buyers specify fabrics and fibres for their ordered clothes. So, textile mills are importing many little-known fibres, apart from the traditional ones, as per their requirements," BTMA President Mohammad Ali Khokon wrote in a letter to the Ministry of Commerce recently.

It has also suggested increasing the wastage rate for producing yarn from raw cotton to 17% from the existing 10%

Although the government provides duty-free facilities in importing five types of traditional fibres – raw cotton, polyester staple, viscose staple, tensile and flux fibre – it is not well-informed about more than 20 non-traditional items.

"Even, the fibres are not on the customs schedule containing the Harmonised System (HS) codes  (a standardised numerical method of classifying traded products). As a result, textile mills import the little-known items under HS codes for similar products. Unfortunately, the customs authorities sometimes identify such imports as false declarations and fine importers," Khokon said, adding that it was not the fault of importers.

He urged the government to take necessary steps for hassle-free imports and exempt duties on all the non-traditional fibres in a bid to promote diversification in the country's export basket and expand exports to new markets.

The popularity of the clothes made of non-conventional fibres would increase day by day as they are fashionable, diversified and cheaper, added the BTMA president.

Some of such fibres are: synthetic staple, linen, Lycra T-40, Remie, acrylic staple, cationic cotton, textured, metallic, pulled fibres and PCW.

The BTMA, in the letter, requested the ministry to brief the National Board of Revenue about the matter so that the revenue agency can consider the duties exemption in formulating the national budget of the upcoming fiscal (FY2022-23).

The textile and clothing sectors are struggling to make their recovery from the Covid-induced fallouts. 

In the next couple of years, the struggle would continue, the association expressed fear and said the next budget was crucial for their future.

The trade body of textile mills also requested the government to continue the 15% corporate tax rate facility until 2026 for the companies involved in the sector. The tax waiver is supposed to end in June this year, which the sector has been enjoying since 2019-20 fiscal.

The association said the reduced corporate tax rate helped them increase capital and continuing such a facility would also benefit the government in the long run.  

The trade body demanded reducing import-duties on textile parts to 1%, like capital machinery, from the existing 26-104%.

"It became tough to continue businesses competitively for the existing high import duties on instruments of the mills," the letter reads.  

The BTMA also demanded cutting down value-added tax on locally manufactured yarn to Tk3 per kg. Currently, it is Tk6 per kg.

Mentioning that the real wastage rates in yarn production were higher than government fixed rates, the organisation called for increasing the rates to 17% for the yarn for raw cotton, up from the existing 7-10%.

It suggested a 34% wastage rate for producing yarn for export purposes, which is currently 10-12%. 

The government-set wastage rates were also higher in other supplier-countries competing with Bangladesh in export markets, the BTMA, in its letter, mentioned.

Besides, it proposed to consider the 0.50% deducted source tax as the textile companies' final settlement.