Textile millers want duty-free raw material, 3pc equal VAT on all yarn

Export-oriented textile and apparel makers asked the government to allow duty-free import of raw materials for the textile sector and an equal 3 per cent Value Added Tax on all kinds of yarns for the fiscal year 2021-22 to combat the economic fallout of the Covid-19 pandemic.

They also called for imposing a one per cent import duty on spare parts of capital machinery used for the textile and apparel industry in the next budget.

The Bangladesh Garment Manufacturers and Exporters Association, the Bangladesh Knitwear Manufacturers and Exporters Association, and the Bangladesh Textile Mills Association in a letter placed to finance minister AHM Mustafa Kamal on Sunday made the call.

"With cotton, the primary textile sector uses different types of fibres such Viscose Staple Fibre, Polyester Staple Fibre, Tencel and Modal fibre as raw materials. The usage of these types of fibres will increase due to growing demands from the buyers," read the letter.

"So, considering the demand, the textile sector needs withdrawal of all kinds of duties on these raw materials," it added.

They also laid stress on imposing equal VAT on yarn made of these raw materials. Currently, a 3 per cent VAT is imposed on cotton yarn, the letter added.

As of now, entrepreneurs in the primary textile, spinning, weaving and dyeing, printing and finishing are using computerised machinery and the latest information technology, the sector people said. The sectors need to import spare parts later but the sector people have to pay higher import duties ranging 26.2 per cent to 104.68 per cent, the exporters explained.

“With the existing duty rate, it is quite impossible to compete with our competitors. In the given context, we are urging the government to set one per cent import duty on capital machinery parts for the next budget,” they added.