Recently, stakeholders in Bangladesh’s ready-made garment (RMG) sector have called for the government to reduce import duties on renewable energy materials, such as solar power equipment.
This appeal was made during a focus group discussion organized by the Business Initiative Leading Development (BUILD) on the topic of “Energy transition in the apparel sector”, particularly concerning market access to the EU on 21 May.
The current import duties on raw materials for setting up renewable energy plants in Bangladesh range from 25% to 28%, and in some cases, they can be as high as 85%.
These high tariffs are seen as a significant barrier to the adoption of renewable energy sources within the RMG sector.
Stakeholders urged that lowering these duties would help garment factories transition to more sustainable energy sources, thus reducing their carbon footprint and aligning with global sustainability goals.
Additionally, stakeholders highlighted the need for government policy support to establish domestic factories for producing renewable energy equipment, which would further aid in making renewable energy more accessible and affordable for the industry.
This push for renewable energy adoption is partly driven by pressure from European buyers, who are increasingly prioritizing sustainability and emission-free products.
This move is crucial for maintaining the competitiveness of Bangladesh’s RMG sector, especially as the country prepares to graduate from its Least Developed Country (LDC) status by 2026. The transition to renewable energy is seen as a way to enhance the sector’s sustainability, reduce costs in the long term, and meet the stringent environmental standards of international markets
BUILD CEO Ferdaus Ara Begum highlighted the apparel industry’s consistent success as Bangladesh’s primary export, ranking second globally after China.
Over the past decade, apparel exports have consistently accounted for 80-85% of Bangladesh’s total export share, reaching $47 billion in 2023. The EU market stands as a crucial export destination for this sector.
Regarding this, Ferdaus Ara said that currently RMG factories can derive 10-15% only of their total energy from rooftop solar, necessitating the purchase of renewable energy certificates to meet the remainder, incurring significant costs. However, purchasing certificates does not reduce local emissions.
Also, the importance of reducing carbon footprint and increasing renewable energy usage to avoid concerns about exporting RMG products to the EU market.
According to Shams Mahmud, director of BGMEA and Managing Director of Shasha Denims Limited, approximately 750 BGMEA members operate as SMEs and will face challenges in ramping up renewable energy usage due to the substantial investment required.
