Bangladesh’s National Board of Revenue (NBR) has withdrawn duty-free bonded warehouse facilities for 10-to-30-count cotton yarn, a category that accounts for roughly 60% of the country’s total yarn imports, in a move that has split textile millers and garment exporters.
The order, No. 51/2026/Customs/519, was issued on Sept. 7 and took effect immediately, cancelling bonded import benefits under HS headings 5205, 5206 and 5207. It followed a recommendation from an inter-ministerial committee formed by the prime minister and chaired by the commerce minister, which met for the first time on Aug. 20. Read Here
Exporters holding bonded warehouse licenses can still import the yarn, but only against an unconditional bank guarantee equivalent to applicable duties and taxes. The guarantee will be released only after the manufactured goods are exported and export proceeds are fully repatriated, verified by authorized dealer banks. Certification from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) or the Bangladesh Textile Mills Association (BTMA) is now mandatory for import and release at customs stations. Shipments made before the order’s issuance are exempt.
Yarn in the 10-to-30-count range, used widely in the knitwear sector, was imported worth about 300 billion taka ($2.5 billion) last year, according to industry estimates. The commerce ministry had first urged NBR to cancel the facility in a January letter, after BTMA warned that a flood of cheap bonded imports was pushing local spinning mills toward what it called a survival crisis.
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BTMA welcomed the decision, saying easy access to bonded imports had suppressed demand for domestically produced yarn and left spinning mills operating below capacity. The association said the change would shift demand toward local mills, aid compliance with least-developed-country graduation rules requiring 40%-60% value addition, and help address roughly $7 billion in unrepatriated export proceeds that it called “extremely concerning.”
BGMEA and BKMEA strongly opposed the measure, calling it a “suicidal decision” introduced without consultation. In a joint letter to the commerce ministry, the groups said the move would raise costs for exporters already contending with weak orders, disrupt exports and send the wrong signal to foreign buyers. They noted the withdrawal was not discussed at the inter-ministerial committee’s Aug. 20 meeting.
The dispute underscores broader tension between Bangladesh’s spinning and ready-made garment industries as the country prepares to graduate from least-developed-country status, a transition that requires higher domestic value addition across the textile supply chain.