• Wednesday, Jun 29, 2022
  • Last Update : 04:24 pm

Knitwear manufacturers want 1% duty on imported spare parts in FY22

  • Published at 08:52 pm May 18th, 2021
RMG worker Dhaka
A woman at work in a garment factory in Dhaka Dhaka Tribune

They currently pay 1% duty on imported capital equipment but have to pay 28% to 104% tax on the import of spare parts

Knitwear manufacturers in Bangladesh have asked for a 1% duty on the import of spare parts used in textile and RMG factories for the FY22 budget.

They currently pay 1% duty on imported capital equipment but have to pay 28% to 104% tax on the import of spare parts.

“We have already submitted a budget proposal to the Ministry of Finance jointly with Bangladesh Textile Mills Association [BTMA],” said Mohammad Hatem, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

“We expect that the government will consider our proposals and help us to turn around from this shaky situation brought on by the pandemic,” he added.

Also read - Swisscontact, BKMEA team up to support Covid-19-hit RMG workers

The BKMEA has also proposed an exemption on export-oriented knitwear industries from the obligation to file zero VAT returns and exemption of 100% VAT on all products and services related to the export and production of this industry.

It has also proposed to fix the tax at source on readymade garment exports at 0.5% for the next five years and they have also demanded that the rate of the income tax deduction on incentives be reduced from 10% to 3%.

The apex organization of the knitwear industry has also requested to retain the incentives and cash assistance provided against exports for the next five years in the interest of the development of the industry.

Due to the ambiguity and lack of coordination in the cash assistance circular, the concerned banks, audit firms, and Bangladesh Bank have given different interpretations at different times. That is why the industries in this sector often face problems and are embarrassed to get money, said BKMEA.

“We have requested for the issuance of a master circular to address the problem of payment of alternative cash assistance in the domestic textile sector,” said Hatem.

They have also proposed to keep the duty and VAT on imported chemicals for ETP at 0%.  

“At present, there is no duty on import of cotton fibre and VAT is Tk3. We want uniform rates for all types of fibre. We have proposed for exemption of duty on all types of yarn made by any type of fibre and to fix VAT at Tk3,” said Mohammad Hatem.

“Labourers are the heart of any industry. We always focus on the well-being of our labourers. So, we have applied for the introduction of a rationing system for the workers and for allocating it in the budget,” he added.

The BKMEA vice president also said that TCB sells daily necessities at lower prices and they have proposed TCB pay visits to the areas where most labourers stay.

Also read - RMG, textile owners seek stimulus again to pay wages, bonuses

If the infrastructural development of the knitwear sector is achieved, the sector will be able to gain its desired goals. Therefore, they have proposed to include these proposals in the forthcoming budget with special importance, said the BKMEA.

Talking to the Dhaka Tribune, spokespersons of several knitwear factories like Amber Textiles and Apparels, Aboni Knitwear, and Dynasty Textile also expressed their support for the BKMEA proposal.

According to BKMEA, about 1.9 million workers are directly involved in the sector, while the contribution of this sector to GDP is 4.21%.

In the 2019-20 fiscal year, this industry’s exports fell to $13.91 billion — about a 17% fall from the previous fiscal year.

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