While exporters are now allowed to import raw materials from abroad on an FOC basis under a recent policy change, such a provision does not exist for sourcing the same materials locally, industry leaders said.
Bangladesh RMG players have urged the government to remove restrictions on sourcing raw materials free of cost (FOC) from local suppliers.
Industry leaders said allowing FOC sourcing from domestic suppliers would boost local sales, strengthen backward linkage industries and raise overall value addition in the export-oriented sector.
Many local suppliers can provide inputs now against global orders.
They feel allowing FOC sourcing from domestic suppliers would boost local sales, strengthen backward linkage industries and raise overall value addition in the export-oriented RMG sector.
In a letter sent recently to the National Board of Revenue (NBR), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) called for removing policy barriers and providing clarity on the issue, according to a domestic media outlet.
Many local suppliers are now capable of providing inputs against international buyers’ orders. In some cases, foreign buyers or their nominated agents are willing to supply materials free of cost through local vendors for use in export production.
However, the absence of clear policy guidelines on whether such transactions qualify as ‘deemed exports’ has created uncertainty, preventing manufacturers from using locally sourced FOC inputs.
Allowing exporters to use locally-sourced inputs under a cutting, making and trimming (CMT) model would further streamline production, BKMEA said.
Fibre2Fashion News Desk (DS)
