Published : 30 Aug 2026, 03:40 PM
Updated : 08 Sep 2026, 09:37 AM
As the use of local fabrics and other raw materials has increased, Bangladesh’s garment entrepreneurs are reducing their import costs and raising their value added.
Value added in garment exports has increased slightly in the second quarter of this year compared to the same period last year. Stakeholders in the sector say the switch to domestic sourcing has contributed to the change.
In economic terms, value added is the difference between the market value of a product and the total cost of the raw materials or constituent elements used to make it. That is, the “value added” by transforming it into the final product.
As more value is added to exports, more of the earnings from selling these products or services are added to the country’s economy. It also means greater net profit and more wealth generation than before.
According to Bangladesh Bank, the second quarter of this year (April-June) saw ready-made garment export earnings of nearly $10.01 billion. Of this amount, about $3.87 billion, or 38.32 per cent, was spent on importing raw materials. This means that the garment production process added 61.68 percent value to the imported costs.
The sector’s export earnings in the second quarter last year amounted to nearly $9.12 billion, of which approximately $3.94 billion – 43.22 percent – was spent on raw material imports. This means the production process added 56.78 percent of value to the imported raw materials at the time.
Fabric accounts for the highest raw material cost in the garments sector. In addition, different raw materials - including yarn, cotton, dyes, chemicals, and synthetics - have to be imported. After deducting import costs from earnings, the amount left over can be considered value added.
In addition to the cost of imported raw materials, there are also local costs, such as electricity, gas, fuel, wages, infrastructure rent and utilities (water, holding tax), and regular profit. If this amount is deducted from the value added, the amount left over is the profit for the entrepreneur.
Since better-quality fabrics are now available in the country, foreign buyers are increasing their use to cut down on lead time, says Inamul Haq Khan, managing director of Ananta Garments.
Inamul, also the senior vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told bdnews24.com: "The reason for the increase in value added is that all items are now being manufactured within our country. Previously, zippers had to be imported from abroad, but now they don't. If special zippers are needed, they can be brought in, but otherwise it is not necessary."
He added that, aside from very specialised fabrics, buyers are getting all other fabrics from local textile mills. This reduces the time required for exports and everyone benefits from this, he said.
"The majority of raw materials are now being produced here. The reason for this increase is that new factories are being built. Still, sometimes some raw materials had to be imported. But now that has decreased."
Inamul said, “What is happening in Bangladesh is that some new fabrics are being made domestically. Buyers are switching to these Bangladeshi fabrics. Most buyers are now using Bangladeshi fabrics to reduce the lead time. If you do that and lead time is reduced, the value added increases considerably.”
According to the central bank, the first quarter of the year (January-March) saw local value added in the ready-made garment sector at 61.35 percent.
During this period, total garment exports were nearly $9.2 billion. Of this, net exports were $5.64 billion and raw material imports were $3.56 billion.
In the previous quarter, i.e., October-December, the local value added was 64.22 percent, which is the second highest in the last six years. In October-December 2023, net garment exports or local value added was 67.69 percent.
The quarters where value added were highest over this six-year period were 64.98 percent in the July-September quarter of 2021, 67.69 percent in October-December 2023, and 64.22 percent in the October-December quarter of 2025.
Value added has been fluctuating between 56 and 61 percent since 2023.
The rate of value added varies depending on the design, size, and fabric quality of the garment. Industry insiders said that products like T-shirts and trousers have value added rates of 10 to 30 percent, medium-priced garments can have a value added of 40 to 80 percent, while the highest value added is in high-priced and quality garments. In those cases, the value added can be double to triple the import cost.
The government has also been determining the value added rate from time to time to encourage the use of domestic raw materials.
According to the latest “Import Policy Order 2026-2029”, the minimum value added rate in the ready-made garment sector is 10 percent to a maximum of 40 percent. This rate is determined according to the types of raw material imported and the types of garments under the bonded and non-bonded facilities.
The minimum value added rate for underwear and specialised products made of synthetic fibre is 40 percent. The same rate is set for both woven and non-woven garments in the latest import policy.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said: "That value-added margin is not yet possible in synthetic fabrics. This rate was not discussed with the traders in this sector when the policy was made."
Mohiuddin Rubel, managing director of Denim Expert Limited, told bdnews24.com: "Some of the reasons for the increase in the value-added ratio are that the prices of cotton and yarn have decreased globally, meaning they have become cheaper than before. It is also available within our country and can also be imported.
"If you buy it from within the country, the value added will increase. The cost of importing raw materials will also decrease."
He said, "The value added for woven items is high. The exports of woven goods is higher than before. This is another reason."
