Bangladesh further reduces cash incentives for exporters

01 Jul '24

2 min read

Bangladesh further reduces cash incentives for exporters

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Insights

Bangladesh has cut its export subsidies further for almost all sectors to encourage exporters to prepare for global competition sans state support after 2026.
In this fiscal, the maximum rate of export incentive is 10 per cent and the minimum 0.3 per cent.
Cash incentive on export earnings of apparel makers has been halved to 0.30 per cent from 0.5 per cent.

Bangladesh has reduced its export subsidies further for almost all sectors to ease pressure on the treasury and encourage exporters to prepare for global competition without government support after the country graduates from the least developed country (LDC) status in 2026.

The government offered cash incentives in the 1-15 per cent range on export earnings between February and June in the last fiscal to enhance competitiveness of exporters. The highest rate was 20 per cent earlier.

From the latest fiscal that begins today, the maximum rate of export incentive has been set at 10 per cent and the minimum at 0.3 per cent, the Bangladesh Bank said in a notice.

Cash incentive on export earnings of apparel makers in all markets has been halved to 0.30 per cent from 0.50 per cent. Cash subsidy for venturing into new markets has been reduced from 3 per cent to 2 per cent, according to domestic media reports.

The reduced export incentive will be applicable to various other sectors, including jute and jute goods, leather and leather products.

The World Trade Organisation (WTO) now considers cash incentives as export subsidies. But when an LDC graduates to a developing nation, it cannot continue cash assistance as per the WTO agreement on subsidies and countervailing measures.

Exporters are obviously disappointed over the government decision.

Fibre2Fashion News Desk (DS)

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