Textile millers of the country have urged the government to withdraw a 2 per cent advance income tax imposed on imported cotton recently.
They also requested the government to exempt specific tax of Tk 5 imposed on per kilogram of domestic production of cotton yarn, manmade fibre and mixed fibre in the budget of the 2025-26financial year, which was Tk 3 per kilogram.
Showkat Aziz Russel, president of the Bangladesh Textile Mills Association, made these requests in separate letters sent to advisers of the finance and commerce ministries, governor of the Bangladesh Bank and chairman of the National Board of Revenue on Thursday.
BTMA president Showkat Aziz Russell said that the newly imposed AIT and specific tax on yarn would severely disrupt domestic spinning mills and endanger the sector鈥檚 competitiveness.
Recently, the government issued an SRO imposing a 2 per cent AIT on imports of over 150 essentials and capital goods for industries.
The range of items facing 2 per cent AIT included machinery, spares and raw materials for various industries, like the ready-made garment and textiles.
The NBR issued a gazette notification last month, where some major items like cotton, wheat, flour, maize, rice, soya beans, sunflower seeds, mustard seeds, linseed, sugar, bulbs, tubers, jet fuels, kerosene, diesel, furnace oil, LPG, natural gas, petroleum bitumen, iron oxides and zinc sulphate faced a 2 per cent AIT.
Referring to the SRO, the BTMA president said that the decision was made without consulting industry stakeholders and was likely to be 鈥榮elf-defeating鈥� for the sector and the wider economy.
鈥楢lthough it may appear to aid revenue mobilisation, in reality, it would be suicidal.聽The imposition of this AIT would significantly increase production costs, placing our textile mills at a disadvantage compared with competitors in other countries and making it impossible for local textile mills to sustain their businesses under the burden of a 2 per cent AIT,鈥� he added.
He also said that this 2 per cent AIT on every consignment would effectively accumulate to 29 per cent annually, gradually squeezing the working capital of mills and that聽could deplete entirely within three years.
Meanwhile, to respond this governmental decision, the BTAM called a press conference scheduled on Saturday, that is today.
Showkat said that Bangladesh did not produce cotton and was entirely dependent on imports and the local mills had the capacity to supply 100 per cent of yarn for the knit sector and 55-60 per cent for woven apparel.
He also said that this was accomplished despite challenges like gas and electricity price hikes, dollar crisis, local currency devaluation, rising interest rates and declining export incentives.
鈥楽uch policy decisions, made without consultation, put at risk the $75 billion investment in the textile and apparel sector and undermine the target of reaching $100 billion in export earnings by 2030,鈥� the BTMA said.
The association called on the government to support the domestic textile sector as a key partner in export growth, rather than weakening its competitiveness through abrupt fiscal measures.
