Bangladesh Maintains Export Incentives for Goods Until 2027

The Bangladesh government has decided to keep the cash incentives for product exports unchanged for the upcoming fiscal year 2026-27. A Bangladesh Bank circular issued on Sunday confirmed that 43 specified export products will continue to receive incentives ranging from 0.30% to 10%. These rates remain consistent with the previous fiscal year, reflecting policy continuity. The incentives are contingent upon the repatriation of export earnings within the stipulated timeframe and adherence to existing foreign exchange regulations and documentation requirements. The central bank emphasized that all existing conditions, eligibility criteria, and procedures for granting these incentives will remain the same. Authorized Dealer (AD) banks have been instructed to meticulously verify applications and disburse incentives according to current guidelines. The former Awami League government had reduced export incentives twice in 2024, citing Bangladesh's impending graduation from Least Developed Country (LDC) status in 2026. World Trade Organization (WTO) rules generally prohibit export subsidies for developing countries. To mitigate potential challenges for the export sector upon LDC graduation, the government had planned a phased withdrawal of these incentives. Initially, the outgoing interim government postponed the complete withdrawal, scheduled for July, by five months due to factors including potential US tariffs under President Donald Trump, Indian restrictions on exports via land ports, and post-political-change industrial instability. While the interim government had reset the deadline to November, the current administration has reversed this decision. Responding to business community demands, the government has also applied to the United Nations to defer Bangladesh's LDC graduation by three years. Ready-made garments and textiles are the primary beneficiaries of these incentives. Exports of ready-made garments made with local yarn to new markets will receive up to 5.9% incentive, a reduction from the previous 9.1%. Leather and leather goods, the second-largest export sector, will receive 10% for finished leather products and 6% for crust and finished leather until June 30, 2025. Processed agricultural products will also receive a 10% incentive. Despite a decline in exports, jute and jute products will maintain a 10% incentive for diversified products, with 5% for jute products and 3% for jute yarn. Light engineering products will receive 10%, pharmaceutical raw materials 5%, bicycles 3%, and furniture 8%. Other products retaining their incentives include frozen shrimp, motorcycles, electronics, PET bottle flakes, ships, plastic products, handmade items (like hogla, straw, or coconut coir), garment factory waste (jhoot), animal intestines, horns, and sinews, crabs, and agar and attar.