Fulfilling WTO criteria: Govt opts for export incentive reduction


Staff Reporter :
Bangladesh has announced a comprehensive plan to curtail incentives across all export items to fulfill World Trade Organization (WTO) standard for the graduation from the Least Developed Country (LDC) status in 2026.

The Bangladesh Bank (BB), in a circular issued on Tuesday clarified that the government has opted for a phased approach to gradually reduce export incentives, diverging from an immediate cessation.

With graduating LDC status, Bangladesh cannot continue to provide cash incentives to export industries to meet WTO criteria after 2026.
Meanwhile, the government was providing cash incentives ranging from 1.0 per cent to a maximum of 20 per cent to the exporters for the export of 43 major products including 5 sub-sectors of the textile sector which helped the exporters to overcome the dollar crisis with ensuing relief in foreign trade.

According to the latest official data from the government, a substantial 65 percent of these cash incentives, amounting to nearly Tk5,000 crore, primarily benefit the garments and textiles industry.

The new move has stirred reactions within the export community, with exporters expressing concern over the impact on their bottom line.

However, experts view this decision positively, asserting that these incentives given from taxpayers’ money primarily serve the interests of Western buyers and their consumers. The incentives factored into pricing strategies by Western brands and buyers, are seen as a crucial component influencing competitive pricing in the global market


As per the new circular by the central bank issued yesterday, the special incentive for the readymade garments sector has been scaled down from 1 per cent to 0.5 per cent.

Also, incentives for venturing into new markets have witnessed a 1-percentage point reduction to 3 percent.

This reduction extends to various sectors including jute and jute goods, leather and leather products, frozen fish, agro products, and more.

Before the circular came into effect, the highest incentive rate was for agro products, potatoes, and processed meats at 20 percent, which has now been reduced to 15percent. On the other hand, cash incentives for exports to three major new markets – Australia, India, and Japan – was 4 percent.

The new circular placed these three in the Traditional Market, which has no cash incentive.

According to sources concerned, India, China and Vietnam have also continued to provide such policy support to their export sectors under various names.