Policy shift could add $5–10 billion in garment exports but raises concerns over local textile value addition
Bangladesh’s government is preparing to amend its import-policy order to allow export-oriented garment factories to import 100% of raw materials under free-of-charge (FOC) arrangements—up from the current 50% cap. The reform could significantly increase high-end apparel exports, but it also risks weakening domestic textile linkages if not carefully balanced.
Under the new system, international buyers may supply all inputs—such as fabrics and trims—directly to factories, eliminating the need for local procurement or foreign-exchange outlay. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the policy could unlock an additional $5 billion in garment exports in the first year and over $10 billion once higher-end programmes mature.
The change comes as global buyers seek new sourcing destinations beyond China, particularly for man-made fibre (MMF) and performance apparel. Full FOC access would make Bangladesh more competitive for premium, design-intensive programmes where buyers control materials and specifications.
However, the move has triggered concern among domestic producers. The Bangladesh Textile Mills Association (BTMA) warns that unrestricted FOC imports could reduce demand for locally spun yarn, woven fabrics, and accessories, eroding backward linkages built over decades.
Experts note that maintaining local value addition—once estimated at 89%—is critical. The U.S., for example, requires 40% local content for products labelled “Made in Bangladesh.” Without investment in spinning, weaving, dyeing, and digital finishing, the country risks becoming a low-margin assembler.
For policymakers, the challenge lies in balancing openness with self-reliance: streamlining customs for FOC imports while incentivising domestic textile capacity and sustainability upgrades. If executed well, the reform could mark a strategic leap up the global apparel value chain—turning Bangladesh from a mass producer into a premium manufacturing hub.
