Additional cash incentives for apparel manufacturers would depend on value added

Export-oriented small and medium-sized apparel factories manufacturing knitwear, woven items and sweaters–using imported yarn or a combination of imported yarn–would get additional cash incentives at a rate of four percent on condition that they add at least 30 percent local value.

Entities which have received duty drawback or customs bond facilities would not be considered for the cash incentives.

The Bangladesh Bank's Foreign Exchange Policy Department issued a circular in this regard on Tuesday.

Earlier, the additional cash incentives were only applicable for small and medium-sized factories manufacturing these clothing items with local yarn.

As per the circular, the value of the products which were imported under duty drawback or customs bonded facility would be excluded from the net freight on-board value for the calculation of the additional cash incentives.

However, a garment factory gets an up to 12 percent cash incentive and a one percent special incentive against export proceeds with existing cash incentives facilities.

The additional cash incentives for small and medium-sized clothing factories would be applicable for products shipped in the 2019-2020 fiscal year.

To get the additional incentives, export-oriented small and medium-sized factories have been asked to file applications along with required documents within 45 days of the issuance of the Bangladesh Bank's circular.

The cash incentives for the 37 sectors which were announced last year would remain active.

In FY20, the government included consumer electronics, electrical home and kitchen appliances to the product list, for the first time; with a 10 percent cash incentive and boosted incentives for a number of products manufactured in economic zones and hi-tech parks.

Among others: information technology-enabled services, information technology companies established in hi-tech parks, surgical instruments and appliances with pharmaceuticals, photovoltaic modules, motorcycles, chemical products, and galvanised sheets or coils enjoy cash incentives at different rates.