Written by The Banking Post
Bangladesh Bank (BB) has raised the cash incentive for export-oriented textile and apparel manufacturers to 5 per cent from 1.5 per cent for fiscal year 2026-27, aiming to encourage the use of locally produced raw materials and strengthen export competitiveness.
The central bank issued the revised policy through Foreign Exchange Policy Department (FEPD) Circular No. 19 on Sunday, amending an earlier circular issued on July 5.
The higher rate applies to the alternative cash assistance available under the existing export incentive scheme and follows a government decision to provide greater support to exporters sourcing yarn, fabrics and other raw materials from domestic manufacturers.
The move is expected to boost local value addition by encouraging exporters to purchase inputs from local textile mills instead of using bonded warehouse facilities or duty drawback schemes.
To qualify for the incentive, exporters must be members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) or other relevant trade bodies.
They must also submit documentary evidence proving that eligible raw materials, including yarn and fabrics, were procured from domestic suppliers.
Bangladesh Bank said the revised incentive does not change the existing procedures for verifying local sourcing. Exporters must continue to comply with the relevant provisions of earlier FEPD circulars and other applicable regulations.
The revised cash incentive will apply to eligible export shipments made between July 1, 2026, and June 30, 2027.
The central bank has instructed all authorised dealer banks to implement the revised incentive with immediate effect.
