Finance Minister Abul Hassan Mahmood Ali yesterday assured garment exporters that the government may review its decision to cut export incentives considering the move's impact on the apparel industry.

The assurance was made after garment makers met with Mahmood at his office citing that the cut in the incentive for exports would hurt their competitiveness in the global market.

Earlier, the government provided cash subsidies ranging from 1 to 20 percent to exporters of various products including garments, the main export item, to enable manufacturers to compete better globally.

By the end of January this year, the authorities reduced the incentives to 0.5 percent to 15 percent and said the new rates will be applicable on shipments made between January 1 and June 30 this year.

Incentives for exporting the top five garment items that account for 56 percent of the country's annual apparel shipments have been withdrawn as well.

Before the notification on January 31, garment suppliers could enjoy a 4 percent incentive for using local fabrics alongside another 2 percent if the shipment is made within the eurozone.

Additionally, exporters would get a 4 percent incentive on shipments to emerging markets, which exclude the EU, US, UK and Canada and the UK.

Meanwhile, the average incentive is 1 percent across all markets.

As such, garment makers and exporters have alleged that their export subsidies have been slashed by nearly 80 percent, making it significantly difficult to stay competitive in the global market.

Against this backdrop, the finance minister assured the decision would be reviewed if found necessary through meetings with various stakeholders.

Ali gave this assurance after hearing the complaints of textile millers and garment exporters at his office in Dhaka yesterday.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Textile Mills Association (BTMA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) were present at the meeting.

They also said the move to slash the incentive on garment exports to three major emerging markets, namely Japan, India and Australia, is very discouraging.

Apparel shipments to the three countries reached nearly $2 billion in recent years, they added.

Some 43 sectors are currently eligible for export subsidies, for which the government has spent about Tk 9,025 crore annually for the past three years.

BGMEA President Faruque Hassan said they will review the issue with stakeholders as the garments sector is the country's highest export earner, accounting for 85 percent of its annual receipts.

He also informed that most garment exporters had accepted orders based on the previous incentive package declared at the start of the current fiscal year.

But as the subsidies were changed halfway through, the potential earnings from value addition on those orders will likely decrease.

"So, exporters will not feel encouraged to make garment items from local materials," Hassan added.

BTMA President Mohammad Ali Khokon echoed the same while pointing out that India, China and other countries give cash subsidies to their export-oriented sectors to make them more competitive worldwide.

Khokon also said the government cut the incentives without arranging any alternative with which the country's exports could grow further.

"So, the decision to reduce cash subsidies should be stopped," he said, adding that the next decision in this regard should be taken in consultation with textile millers and garment exporters.

Before meeting with the finance minister, the leaders also held separate meetings with the finance and commerce secretaries to raise their concerns.

The government started gradually withdrawing its cash incentives on exports as such subsidies cannot be provided after Bangladesh graduates to a developing country in 2026.