Bangladesh Bank has increased the cash incentive for the domestic export-oriented textile sector from 1.5 percent to 5 percent. The central bank issued a circular on Sunday implementing the decision based on a directive from the Ministry of Finance. The incentive serves as an alternative to the duty bond and duty drawback facilities previously available to exporters.

According to the circular, exporters who are members of BGMEA, BKMEA, or other relevant associations must submit proof of sourcing raw materials, particularly yarn and fabric, from domestic sources before receiving the incentive. The measure aims to encourage the use of locally produced inputs in textile exports.

Industry sources noted that about two and a half years ago, exporters using local yarn received a 4 percent incentive, which was gradually reduced to 1.5 percent by mid-2024 as part of preparations for Bangladesh’s graduation from the least developed country list. The new increase to 5 percent is expected to support local raw material use and strengthen the textile sector’s competitiveness.