Leaders of the Bangladesh Textile Mills Association have urged the government to impose a ban on export of all types of garment waste, including cotton, as such waste is used as raw materials for the recycled fibre in the textile industry.
They also demanded withdrawal of 7.5 per cent and 15 per cent VAT respectively on sourcing the raw materials from the local market and supplying the recycled fibre to the spinning mills.
The association recently issued a letter signed by its President Mohammad Ali Khokon to the National Board of Revenue. Around 20 recycle fibre factories across the country are producing 24,00,000 tonnes of recycled fibre annually by using garment jhut or waste as raw materials, it said.
RBD Fibers Limited located at Rupganj in Narayanganj having recycling capacity of 1,20,000 tonnes has so far invested $50 mn, it said.
The factory produces yarn by recycling garments jhut, old and used garments and the textile wastages and later it sells (deemed export) the yarn to local spinners at cash or cash L/C or sale agreement.
‘They have to pay 7.5 per cent VAT against locally sourcing of such raw materials and also pay 15 per cent VAT at the time of selling of such fibre to the spinners,’ the letter said.
As a result, prices of the recycled fibre increased though the mills are struggling to compete with the imported fibre, it said.
Textile millers import raw cotton duty free and the raw materials the recycling units using are the wastages of textile and garment.
These wastages are recycled to fibre, then turned into cotton and yarn, and fabrics and finished garments are produced from the recycled cotton.
Besides, Bangladesh will face post-graduation challenges as high tariff would be applicable to exporting garments to the European Union, the BTMA letter said, adding that garments produced from recycled fibre would enjoy a 30-per cent duty rebate in the EU markets, which would make Bangladesh garments cost effective.
The use of recycled fibre would help to retain $1.0 bn locally, it said.
Earlier on Sunday, Square Textiles Limited issued a letter to the BTMA that alleged a number of exporters exporting garment’s cotton waste using the HS code of yarn waste and thread waste to India and China through land and sea ports.
The government has offered a duty-free export facility on yarn waste and thread waste and also a 25-per cent export duty on cotton waste, it said.
Recently, Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan sought the government policy support to promote the recycling pre-consumer textile waste, known as ‘jhut’ as it is potential for the country to earn $3 bn annually.
