The Bangladesh government is set to reshape its export incentive policy by extending benefits to subcontracted garment factories, a move that could strengthen the backbone of the country’s ready-made garments (RMG) sector.
Broader Inclusion for Subcontractors
Until now, only exporters running their own factories were eligible for cash incentives, leaving subcontractors outside the system. Under the revised policy, incentives will still be paid to exporters but are expected to indirectly benefit subcontracted units, ensuring more equitable distribution across the supply chain.
Why It Matters
Subcontracted operations account for nearly 10% of Bangladesh’s RMG exports and play a vital role in meeting global demand. By including them in the incentive scheme, the government is helping exporters negotiate better with international buyers, while also giving smaller factories room to grow and stay competitive.
Challenges and Outlook
The RMG industry faces rising compliance costs, global market uncertainty, and financing hurdles. Industry leaders are urging the government to further increase incentive rates to maintain competitiveness.
With RMG exports already crossing $40 billion in FY25, this policy shift is more than just a technical adjustment, it’s a step toward greater inclusion, resilience, and long-term sustainability for Bangladesh’s most vital export sector.
