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Bangladesh’s apparel exporters have voiced strong opposition to a move to withdraw bonded warehouse facilities on yarn imports, warning that the decision could trigger serious disruption in the country’s largest export industry.

Leaders of the two main trade bodies—BGMEA and BKMEA—accused the Ministry of Commerce of taking a unilateral step aimed at protecting local spinners without adequately considering the impact on garment exporters, who are already facing slowing global demand and rising production costs.

The concerns were raised at a joint press conference in Dhaka on Monday, highlighting a widening policy rift between spinning mills and export-oriented garment manufacturers.

BGMEA Acting President Selim Rahman said exporters’ views were ignored despite the fact that they are the sole buyers of domestically produced yarn. “Our concerns were sidelined during discussions, and the decision was taken without proper consultation,” he said.

He argued that the proposed restriction contradicts global trade norms, as no transparent investigation was conducted to establish serious injury to local spinners. While acknowledging the need to support the spinning sector, he said productivity upgrades and efficiency gains—not import curbs—are the right solution.

Export performance, he warned, is already under strain. Garment exports fell 2.63 per cent year-on-year in the first half of FY26, with a sharper 14.23 per cent decline in December alone. “If exporters are forced to buy higher-priced yarn, buyers will cut orders. That will also hurt deemed exporters,” he added.

BGMEA and BKMEA jointly called for withdrawal of the proposed curbs and urged the government to consider alternative support measures for spinners, including direct cash assistance, stable gas and power supply, rational energy pricing, tax rebates for export-oriented mills and easier access to low-cost finance.

BKMEA President Mohammad Hatem questioned why policymakers failed to address the root causes of rising yarn imports, pointing instead to cuts in cash incentives for local spinners. He warned that restricting yarn imports could backfire by increasing fabric imports from China, which remain cheaper than locally produced alternatives.

Industry leaders also raised concerns over implementation. They questioned how a facility that has supported export competitiveness for nearly four decades could be restricted within weeks, and warned that upfront duty payments and delayed refunds—often taking up to two years—would sharply increase financing costs.

Data cited at the briefing showed yarn imports under bonded facilities fell 8.11 per cent year-on-year to 345,578 tonnes during July–December of FY26, while imports from India declined 7.33 per cent to 333,854 tonnes. Despite the drop, exporters said Indian yarn remains competitive due to lower production costs, even with import duties ranging from 33.63 per cent to 39.75 per cent.

“Export-oriented industries globally enjoy duty-free access to raw materials,” one industry leader said. “If Bangladesh restricts this facility, buyers will simply shift orders elsewhere.”

Responding to the criticism, the Bangladesh Textile Mills Association said claims by some apparel leaders were misleading. BTMA President Showkat Aziz Russell said the recommendation followed consultations with all stakeholders and was limited to excluding specific cotton yarn counts from bonded facilities, not imposing new duties.

He argued that domestic mills have sufficient capacity to supply these yarns and that duty-free imports largely benefit foreign buyers, while local spinners struggle against subsidised competitors abroad. With Bangladesh nearing graduation from least developed country status, he added, higher local value addition will be essential to sustain export competitiveness.

Industry stakeholders now await a government decision that balances the interests of both spinners and exporters, as uncertainty over input costs threatens to weigh further on the country’s key export sector.