Bangladesh government plans to increase the subsidy ratio for the textile industry

In recent months, the fluctuation of international cotton prices and the weak demand in Europe and the United States have brought a severe blow to the textile industry in Bangladesh, which has led to a downward trend in sales. In order to alleviate this situation, Bangladeshi Finance Minister Moody said recently that the government of Bangladesh will increase the subsidy ratio of textile factories with poor operating conditions.

According to reports, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) each contribute 80% of Bangladesh's annual exports. The contribution rate to imports is up to 30%. Representatives of the association, in consultation with Moody's, raised the hope that the Bangladesh government will increase the subsidy ratio for textile and apparel products by 10% from the current 5% to 15%.

Moody's assured the country's textile factories and garment manufacturers that in order to help the textile and garment industry get rid of the current unfavorable situation, the government will consider raising industry subsidies standards. After consultations with other ministers, a plan will be formulated immediately to solve these problems.

Earlier, Bangladesh’s Ministry of Finance has allocated 11 billion Dhaka as a subsidy for the export industry for the first six months of this fiscal year, with the standard rate for each subsidy ranging from 5% to 20%. Among them, companies that develop new products and new markets (excluding the United States, Canada, and the European Union) receive a subsidy of 2%, the textile industry can generally subsidize 5%, and small- and medium-sized garment and textile factories can provide an additional 5%.

According to statistics from the Central Bank of Bangladesh, in the fiscal year 2010/2011, 16 export industries in Bangladesh received a total of 18.4 billion dha (approximately US$74) in cash subsidies. Among them, the subsidies for garment industry amounted to 8.77 billion dharmas. The Bangladesh Exporters Association, **AbdusSalamMurshedy, said that the government expects that the export industry can maintain its current growth rate and the government will increase the subsidy amount accordingly.

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