As per reports, the new regime sets thresholds ranging from 10 per cent to 40 per cent, depending on product category, free on board (FOB) value, and sourcing arrangement, with the highest requirements reportedly applying to selected garments made with raw materials imported on a Free-of-Cost (FOC) basis.
Bangladesh’s Import Policy Order 2026–2029 sets garment export value-addition thresholds of 10 per cent to 40 per cent by product, FOB value and sourcing.
FOC-based synthetic-fibre garments and underwear reportedly face 40 per cent, while children’s wear doubles to 30 per cent.
The policy aims to deepen backward linkages, but exporters warn MMF, utilities and thin margins could test
The changes are not a blanket increase across the apparel sector. Under the revised framework, woven and knitwear exported under standard back-to-back letters of credit (LCs) reportedly continue to qualify for the lower 10 per cent value-addition requirement when their FOB value exceeds $60 per dozen. For garments below that FOB level, however, the applicable requirement is reportedly 30 per cent. Previously, the minimum value addition for woven and knit garments with an FOB value below $60 per dozen was reportedly 20 per cent.
For other product categories, the prescribed requirements remain differentiated. Kidswear is reportedly subject to a minimum value addition of 15 per cent under regular LCs, while underwear and products made from synthetic fibres reportedly have a baseline requirement of 20 per cent.
A separate regime applies where raw materials are imported on a Free-of-Cost (FOC) basis. In the case of standard knitted and woven apparel made from either cotton or man-made fibres, the required value addition is reportedly 30 per cent. The requirement is higher for synthetic-fibre garments and underwear, for which it reportedly stands at 40 per cent.
The FOC requirement for kidswear has also been raised substantially, with the minimum value addition reportedly doubling from 15 per cent to 30 per cent.
Overall, the changes point to a more differentiated value-addition regime, with requirements varying according to product category, export price, and the basis on which raw materials are imported.
The policy is intended to encourage greater use of locally produced inputs, deepen backward linkages and curb the scope for trade-based money laundering.
The industry response to this is far more nuanced than a simple thumbs-up or thumbs-down, so to speak. Speaking to the media, the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) reportedly underlined that BGMEA, along with the Bangladesh Textile Mills Association (BTMA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), had agreed on a 30 per cent value-addition benchmark.
In principle, many believe it is a compelling proposition: a stronger local supply chain means more manufacturing, employment, and resilience within Bangladesh.
However, the practical picture seems a bit more complicated. An apparel exporter argued that 30 per cent is manageable for cotton garments but could prove demanding for man-made fibre (MMF)-based products unless domestic backward linkages are developed strongly and quickly.
He also raised concern as to the availability of gas and electricity, and that is a significant caveat in an industry where competitiveness depends not only on policy but also on uninterrupted production.
However, the bigger policy question is whether FOC imports should face stricter value-addition requirements than standard LC arrangements. One industry insider argued that the requirement should be eased because, under this arrangement, buyers bear the cost of supplying fabrics to manufacturers, thereby reducing the producers’ exposure to risks such as order cancellations, price discounts, or costly air shipments.
He also pointed out that a 30 per cent value-addition target could be difficult for factories specialising in basic apparel, where margins are thin.
Another leader associated with a prominent trade body, meanwhile, reportedly questioned the government’s decision to impose a 40 per cent threshold on underwear and synthetic-fibre garments without adequate stakeholder consultation.
The broader view within the industry, it appears, is that the policy’s intent is difficult to fault, but its success will ultimately depend on the execution.
Raising domestic value addition could strengthen backward linkages and help firms adapt to potentially more demanding rules of origin in key export markets after least developed country (LDC) graduation.
The real test, many within the industry argued, will be whether Bangladesh can deepen domestic value addition without losing its competitive edge on cost, turnaround times, and supply-chain dependability. Success could turn the new regulations into a catalyst for industrial upgrading and greater local capacity. Failure, however, could make competing sourcing hubs more attractive, they held.
Fibre2Fashion News Desk (DS)
