Bangladesh Textile Mills Association (BTMA) on Monday called on the government to immediately withdraw the 2 per cent Advance Income Tax (AIT) on cotton imports, reinstate the 15 per cent corporate tax rate for textile manufacturers, and exempt the Tk 5 per kilogram specific tax on locally produced cotton and blended yarn.

The appeal was made during a high-level meeting between a BTMA delegation and Finance Adviser Salehuddin Ahmed, National Board of Revenue (NBR) Chairman Abdur Rahman Khan and other senior officials at the Ministry of Finance.

During the discussion, the BTMA delegation expressed deep concern over the adverse impact of India’s subsidised textile exports on Bangladesh’s domestic market.

They argued that Indian producers are leveraging government incentives to increase exports at artificially low prices, creating an uneven playing field for Bangladesh’s textile sector.

BTMA representatives stressed that the 2 per cent AIT imposed on cotton imports conflicts with the principle of final income tax assessment and will introduce administrative complexity and harassment for importers.

They pointed out the inconsistency of taxing cotton—the primary raw material for domestic yarn production—while allowing duty-free import of finished yarn.

BTMA delegation said that the policy was counterproductive and posed a risk to the country’s textile base, as it incentivised imports over domestic production, which in turn threatened jobs, reduced local value addition and weakened the competitiveness of Bangladesh’s textile mills.

The delegation warned that the new tax regime would encourage increased yarn imports at the expense of locally produced yarn, particularly as shipments of cotton remain stalled at Chattogram Port due to the unresolved tax issue.

They also urged the government to waive demurrage charges resulting from the delays.

The BTMA further argued that customs officials are overvaluing imported cotton, leading to inflated tax bills and discouraging local production.

Such practices, they said, will turn Bangladesh into a net importer of yarn, ultimately benefiting foreign exporters and their labour markets, while Bangladesh loses employment opportunities and economic value.

On the matter of corporate taxation, the BTMA requested that the 15 per cent corporate tax rate previously applicable to the textile sector be reinstated and maintained until June 2028, aligning it with the preferential 12 per cent tax rate currently enjoyed by the readymade garment (RMG) industry.

The association also demanded the removal of the Tk 5/kg specific tax on yarn produced using cotton and synthetic fibres.

They warned that failure to do so would raise fabric prices, discourage consumption among low-income groups, and place further strain on the industry—ultimately affecting banks, insurers, and other stakeholders tied to the sector.

In response, government officials acknowledged the BTMA’s concerns and assured the delegation that prompt steps would be taken to address the issues.

The BTMA delegation included its President Shawkat Aziz Russell; former Presidents Matin Chowdhury and Tapan Chowdhury; Bangladesh Chamber of Industries (BCI) President Anwarul Alam Chowdhury (Parvez); former BTMA Vice President Syed Manjurul Haque; Envoy Textiles Ltd Chairman Kutubuddin Ahmed; Vice Presidents Md Shamim Islam, Salehuzzaman Khan, and Md Nurul Islam; Directors Khorshed Alam, Md Mosharraf Hossain, Md Badsha Mia, Rajib Haider, and M Solaiman; Secretary General Brig Gen (Retd) Md Zakir Hossain; and Joint Secretary General Muhammad Ziaur Rahman.