Bangladesh weighs yarn import rules after $987.5m payment surge

Bangladesh textile and apparel importers paid $987.5 million for yarn in July–September FY2026-27, up 9.7% year on year, even as raw cotton imports fell 14.4% to $727.5 million over the same period.

Central bank data indicate that local spinning capacity is not fully meeting export demand. For sourcing teams buying through Bangladesh, that divergence turns yarn policy into a working-capital and delivery-planning variable, not an administrative footnote.

The government wants to protect local spinning mills and the heavy investments behind them. Exporters need competitive material to preserve their position in global knitwear markets. Bangladesh’s knitwear sector relies heavily on 10–30 count cotton yarn.

What does the bonded-warehouse change mean for exporters?

The change begins on September 7, when the National Board of Revenue withdrew bonded-warehouse import facilities for 10–30 count cotton yarn under specified customs classifications.

• Importers must submit bank guarantees equal to applicable duties and taxes. Customs releases the guarantees only after verifying that the yarn was used in export production.
• The stated aim is to curb duty-free leakage and protect local spinners.
• A recent three-month High Court stay on the Commerce Ministry’s suspension of the NBR order leaves the regulatory position unsettled.

For exporters, the cash effect arrives before any competitive gain. The importer posts the security and can face higher financing costs while the guarantee remains outstanding, tying up working capital. The pressure falls hardest on small and medium-sized factories, where procurement costs can rise and delivery delays can become missed buyer deadlines.

The cost gap has a cap, not a resolution

Exporters put the landed cost of yarn imported from India and China at around $3.30 per kilogram, against $3.85 for locally sourced yarn. On their figures, local material costs $0.55 more per kilogram, or roughly 17%.

That comparison remains a contested input, not a settled market benchmark. Millers dispute allegations of excessive pricing, and differences in quality, specifications and supply reliability may sit behind the gap. An administrative price cap cannot reconcile all three variables.

The Bangladesh Textile Mills Association has capped 30-count single carded yarn at $3.25–$3.45 per kilogram. The range sits below the local cost cited by exporters, but it does not settle the sourcing decision. Price, technical performance and delivery reliability still have to align; a lower ticket price offers little benefit when delivery dates slip.

At a November 9 meeting with industry leaders, Prime Minister Tarique Rahman directed an inter-ministerial committee to submit recommendations by November 20. The committee is led by Khandakar Abdul Muktadir, Minister for Commerce, Industry, and Textiles & Jute, and will review the bonded-warehouse system and examine practices adopted in competing countries.

This is a planned policy review, not a completed change in customs treatment. The September 7 directive and three-month court stay are the procedural facts; the recommendations remain a future decision. Sourcing teams cannot yet treat either local protection or bonded import access as settled for contract and lead-time planning.

What a workable framework would require

The policy direction advanced in the debate is performance-based: local mills should receive fair market opportunities, while exporters should retain access to imported yarn when domestic supply falls short on price, quality or delivery terms. That is a more exact standard than simply favoring one side, though the test remains unfinished.

Digital tracking of bonded imports and regular consultations among BGMEA, BKMEA, BTMA and customs could help prevent duty misuse while preserving oversight. The commercial test is whether a revised framework can maintain that control without holding more exporter cash than necessary.

The recommendations could also establish a broader industrial-policy template for local manufacturing and Bangladesh’s position in global garment markets. The November 20 decision will show whether Dhaka couples protection for domestic mills with dependable import access when domestic terms fail.