Bangladesh commerce ministry plans to increase the maximum wastage rate in producing apparel products from raw materials from 16 per cent to 28 per cent. As per a Business Standard report, this will allow readymade garment exporters to import more yarn and fabrics.As per the decision, from now the maximum wastage rates will be 25 per cent for basic readymade garment items, 28 per cent for specialized items and 3% for sweaters and socks.
Woven fabric exporters labeled the decision as “better than nothing”, but knitwear exporters have rejected it as they think the wastage rate should be at least 35 per cent. According to stakeholders, if the production wastage rate of an export-oriented apparel manufacturer – who enjoys duty-free facility for raw material imports – is less than the prescribed rate, they sell the excess raw materials in the open market. This eventually damages the business of local companies that produce raw material. On the other hand, if the actual wastage rate is higher than the rate set by the government, the authorities impose duty, supplementary duty and VAT on the extra wastages.