Bangladesh has set the maximum wastage rates for knitwear factories. These will be 27 per cent for basic items, 30 per cent for specialized items and four per cent for sweaters and socks. This is important for knitwear manufacturers because if production wastage rate of an export-oriented readymade garment manufacturer, who enjoys a 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 materials. However, the knitwear industry is not happy with the new rates. As Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) points out the rate is not acceptable. He says it will hamper exports growth and they want at least 35 per cent wastage rate. He also said the new wastage rate is by no means reasonable and will not solve problems rather accelerate them.
On the other hand, if the actual wastage rate is higher than the rate set, duty, supplementary duty and VAT is imposed on the extra wastages. Apart from the basic items, separate categories have been created for the first time and the wastage rate is set at four per cent for sweaters, socks and similar item productions, and 30 per cent for special items including rompers, gowns, and hoodies.
Earlier, the maximum wastage rate was revised from 16 per cent to 27 per cent for the production of basic knit items — T-shirts, polo shirts, trousers, shorts, skirts, pajamas.