Bangladesh's Yarn Import Curb Is Back in Force, and a Reform Report Is Due 20 November. What It Means for Buyers

What happened, in order

• 20 August 2026: an inter-ministerial committee chaired by Bangladesh's commerce minister recommended that garment exporters buy at least half of their yarn from local spinning mills and import the rest. The ministry passed that on to the garment, knitwear and spinning associations in a letter dated 10 September, The Financial Express (Dhaka) reported on 23 September.
• 7 September: the National Board of Revenue withdrew the duty-free bonded-warehouse facility for imports of 10 to 30 count cotton yarn under HS headings 5205, 5206 and 5207. Exporters can still import that yarn, but against a bank guarantee covering the duties and taxes instead of duty-free under bond.
• 13 September: the commerce ministry asked the revenue board to suspend the withdrawal pending further review, after objections from garment exporters.
• 29 October: the High Court suspended the effect of the ministry's letter for three months and issued a rule questioning the legality of the ministry's intervention, Textile Today reported on 10 November. That is the only report of the court order we have found. On the same day the revenue board issued an order under Section 266 of the Customs Act, 2023 clarifying that the curb covers single (not plied) 10 to 30 count cotton yarn and confirming that exporters holding warehouse licences import it against bank guarantees, The Financial Express reported, citing the state news agency BSS.
• 9 November: Prime Minister Tarique Rahman met leaders of the garment, knitwear and textile mill associations and directed a committee headed by Commerce Minister Khandakar Abdul Muktadir to recommend reforms to the bonded-warehouse system by 20 November, in line with practice in competing countries, Textile Today reported on 10 November, citing meeting sources.

Why this gets its own post

We first wrote about the withdrawal inside our LDC graduation post in September, then updated it when the ministry asked for a suspension, and again in October when reporting described the curb as back in force. That post's own headline date has since moved to 2029, and a buyer searching for the yarn curb would not find it there. With a court order, a confirming customs order and a deadline from the head of government in the space of two weeks, the dispute is now a story of its own.

What the curb covers, and what it does not

It covers cotton yarn: HS 5205 and 5206 are cotton yarn and cotton-majority blended yarn, and 5207 is cotton yarn put up for retail sale. Counts of 10 to 30 are coarse to medium yarns, used mostly in knitwear such as T-shirts, polos and sweatshirts. Bangladeshi business press reported in September that these counts make up more than 60 percent of the country's yarn imports, and revenue board data cited by Textile Today show imports under those headings nearly doubling, from 350.8 million kg in FY23 to 697.1 million kg in FY25.

It does not cover woven fabric, and it does not cover yarn spun from man-made fiber, such as the polyester and viscose yarn that poly-viscose suiting and shirting is woven from. Those sit in other chapters of the tariff and were not named in the order.

It is not a ban either. The yarn can still come in. What changes is that an exporter has to tie up a bank guarantee equal to the duties and taxes on every consignment instead of importing it duty-free under bond, which costs working capital and adds paperwork.

The direction is bigger than one order

The curb is one of several moves pointing the same way. The 50 percent local-yarn directive is the second. The third is a rate change already in force: Bangladesh Bank raised the export cash incentive for garment exporters using locally produced yarn or fabric from 1.5 percent to 5 percent for FY27, as we noted in the LDC post.

The fourth was reported on 9 November. The revenue board has proposed cutting the income tax rate for textile mills, which it defines to include spinning, yarn dyeing, fabric dyeing, printing and finishing, from 27.5 percent to 15 percent until 30 June 2030, and sent a draft order to the finance minister on 5 November, according to Textile Today. Its submission cited gas and power shortages that keep most mills at 60 to 70 percent of capacity, and competition from subsidised yarn and fabric imports from neighbouring countries. It does not name a country. Indian mills supply significant volumes of yarn and fabric into Bangladesh's garment factories. The tax cut is a proposal until the order is issued.

None of this is settled. The garment exporters' associations want the bond facility restored and the spinning mills want it kept, and the committee's brief to look at practice in competing countries could be read either way. What has changed is that the curb is in force while that argument runs, and the court's suspension runs to about the end of January 2027.

What it means, by buyer type

• If you buy knitwear made in Bangladesh: ask your supplier whether its yarn is imported 10 to 30 count cotton. If it is, the bank guarantee is a cost the factory is carrying now, and it may show up in quotes for spring and summer 2027 alongside the new minimum wage due from January, covered in our wage post.
• If you buy woven uniforms or suiting made in Bangladesh from Indian cloth: this order does not touch fabric. The wider policy does lean towards local inputs, and the cash incentive already pays a Bangladeshi exporter more for using local yarn or fabric, so ask whether the fabric source changes the quote.
• If you are comparing Bangladesh and India for a 2027 programme: Bangladesh's input policy is unsettled until at least 20 November, and the court's suspension runs into late January. A garment woven and sewn in India from Indian yarn is not exposed to either. Get both quotes with a stated validity date.
• If you buy cloth from India: nothing changes in our price or paperwork. Our fabric is woven from poly-viscose and other man-made fiber blends, not from imported cotton yarn. If some garment work moves to India because of costs in Bangladesh, Indian looms fill faster, so book cloth for a fixed start date early. To check current lead times, Request Catalog.

What we are watching

The committee's recommendations due on 20 November and whether the government acts on them; the High Court's hearing of its rule and the end of the three-month suspension around late January 2027; whether the revenue board's tax order is issued; and the garment wage award. We have not read any of the Bangladeshi orders or the court order in the original, so everything above is attributed to the press reports named, and anyone whose sourcing depends on it should confirm the live position directly.