The government is likely to cut down on the cash incentive on exports by more than Tk 1,000 crore in the new financial year of 2025–26.
Finance ministry officials said that Tk 8,000 crore was likely to be earmarked for cash subsidy to the exporters in the new budget to be announced on June 2.
The outgoing FY2024–25 budget kept Tk 9,025 crore for the same purpose.
Finance ministry officials said that this would be the second year in a row that they were reducing cash subsidies on exports as per the government policy to phase it out in near future.
Bangladesh will not be able to provide cash subsidies to the exporters once it is graduated from the least developed countries’ bloc in November 2026 as per the World Trade Organisation rules.
Ministry officials also said that exporters would be compensated for the losses of cash subsidy with policy support, such as, rebate on power bills, banks loan facilities and improving the ease of doing business.
The country is also trying to sign Free Trade Agreements with various countries to boost trade and economic cooperation in a bid to strengthen its LDC graduation.
Bangladesh has agreed to finalise a FTA with Singapore by the end of 2026, while negotiations are also underway for FTAs with China and Japan.
At present, 43 export items get cash incentive.
Ministry officials further said that the number of the items getting the cash incentives was likely to remain the same, while the rate would be slashed.
At present, cash assistance on the export earnings of apparel makers in all markets is 0.30 per cent.
The cash subsidy for entering into new markets is 2 per cent.
Agro products, potatoes and processed meat exporters enjoy 10 per cent incentive on export earnings, the highest among all sectors.
The government is providing 6 per cent case incentives on crust leather export.
