The Government’s cash incentive against export receipts has increased dramatically over time, but the diversification effort of the Government has yielded little success as many sectors have failed to establish themselves in the international market.
At the moment, taxpayer-funded monetary support is provided to 43 industries at a maximum rate of 15 per cent and a minimum rate of 0.5 per cent.
Bangladesh is now the world’s second-largest provider of garments, with the garment industry being the only one to perform continuously well. Additionally, the industry contributes roughly 85 per cent of the nation’s exports.
The Government has spent thousands of crores of taka over the years to help exporters become competitive in international trade. The subsidy amount stood at Taka 8,689 crore in the last financial year of 2022-23, slightly down from Taka 8,784 crore from a year prior, Bangladesh Bank data showed.
However, the generous handout can’t be continued after 2026 since World Trade Organisation (WTO) rules don’t allow developing and developed countries to pay direct cash incentives to exporters. Bangladesh is set to become a developing country in November 2026.
The imminent graduation and persisting pressure on the coffer amid low tax collections prompted the Government to cut the subsidy for almost all sectors in February to bring down the rates gradually and protect exporters from any shock that may emanate in the event of a sudden withdrawal of the cash aid.
As nations like China and India pay similar incentives under different names, S.M. Mannan (Kochi), president of the Bangladesh Garment Manufacturers and Exporters Association, stated that the organisation has already met with representatives of the Finance Ministry and asked for the continuation of incentives after the LDC graduation.
“Many countries are giving the incentive in the name of technology upgradation or skills development funds.”
The business leader claims that many small and medium-sized businesses as well as growing sectors in Bangladesh lack the financial stability to handle any issues that may arise in the post-LDC future.
“The cost of doing business is increasing because of the power tariff hike, so the Government should continue the incentive even after the graduation,” he said.
Bharat Tex Special Report 2026 
