Bangladesh PM orders November 20 deadline for bonded warehouse reform

Bangladesh's Prime Minister Tarique Rahman has given an inter-ministerial committee until November 20 to deliver recommendations on modernising the country's bonded-warehouse system. The directive lands in the middle of a live legal and commercial fight over duty-free imports of 10–30-count cotton yarn.

Commerce Minister Khandakar Abdul Muktadir heads the committee. Rahman issued the instruction at a meeting with apparel and textile industry leaders on Monday, according to meeting sources. The committee must review the existing bonded-warehouse framework in consultation with industry representatives and propose reforms aligned with practices in competing sourcing countries.

BGMEA, BKMEA and BTMA — the garment, knitwear and spinning-mill associations — all attended the November 9 meeting. Their interests do not align. That is the core problem the committee must resolve.

What triggered the deadline?

The dispute runs through three separate decisions in three months.

• September 7: The National Board of Revenue (NBR) withdrew the duty-free bonded-warehouse facility for 10–30-count cotton yarn under HS headings 5205, 5206 and 5207. Actual exporters now must post bank guarantees equal to the applicable duties and taxes.
• August 20: An inter-ministerial committee recommended garment exporters source at least 50% of their yarn from domestic spinning mills and import the remainder.
• September 13: The Commerce Ministry asked the NBR to suspend the order pending review, after garment exporters warned the restriction would raise production costs and disrupt raw-material supply.

The row then moved to court. On October 29, the High Court suspended for three months the effect of the Commerce Ministry's letter staying the NBR directive. The court also issued a rule questioning the legality of the ministry's intervention. The ministry's attempt to soften the withdrawal is itself now under legal scrutiny.

Why the stakes are high

The numbers explain both sides' urgency. Yarn imports under the affected HS headings nearly doubled to 697.1 million kilograms in FY25, up from 350.8 million kilograms in FY23. The import bill reached Tk 267 billion in FY25.

Domestic spinning mills want protection from that import surge. Garment exporters argue access to competitively priced raw material is essential to hold their position in international markets. Import volumes of this scale, moving in two years, would pressure any domestic milling capacity that cannot match landed prices.

Both claims are partly untested. No document in the public record quantifies how much the bank-guarantee requirement adds to exporters' working-capital costs. Nor has BTMA published capacity data showing whether domestic mills can supply 10–30-count yarn at export volumes. The committee's consultations should surface both figures. Sourcing managers should not assume either side's numbers until they do.

The 50% domestic-sourcing recommendation deserves particular scrutiny. It sets a mandatory local-content floor for an export industry that competes against Vietnam, India and China on price. If the recommendation survives into the final framework, buyers will need to re-cost Bangladesh programmes against alternative origins. That calculation has not been made public.

What does this change for sourcing decisions?

In the short term, nothing is settled. The High Court's three-month suspension runs from October 29, which keeps the legal question live into late January. The NBR withdrawal technically stands; the Commerce Ministry's stay is suspended; the court has questioned the stay's legality. An exporter importing 10–30-count yarn today faces an unresolved guarantee requirement with an uncertain legal basis.

The November 20 report could change that. If the committee proposes a permanent compromise — for example, a modified guarantee regime or a phased local-content rule — buyers and suppliers can plan against it. If it simply restates the competing positions, the dispute returns to court.

Sourcing teams with Bangladesh knitwear and woven programmes should track three dates: November 20 for the committee report, the High Court's hearing timeline on its rule, and any NBR circular implementing or reversing the September 7 order. Until the framework is fixed, yarn cost quotations from Bangladeshi suppliers carry a policy risk premium that no contract clause fully covers.

The prime minister's deadline signals political impatience with a dispute that has cycled through the revenue authority, the Commerce Ministry and the High Court since August. A fixed report date is not a resolution. But it forces a decision point that the past three months of orders, stays and counter-stays have not produced.