Struggling against ‘uneven’ competition with foreign counterparts due to rising production costs, domestic textile millers, particularly spinners, have been losing yarn orders, even from local ready-made garment (RMG) exporters. These exporters now prefer importing raw materials, stalling the growth of the local spinning sector.
As per data from the Bangladesh Bank, Bangladesh’s yarn imports increased by double digits during the first nine months of the current fiscal year (FY), while imports of other raw materials like raw cotton, textiles, and staple fiber declined. From Jul-Mar’23-24, Bangladesh’s yarn imports increased by 10 per cent to $2.32 billion from $2.10 billion during the same period last fiscal year, according to data from the Bangladesh Bank.
The imports of other RMG inputs decreased by 9.1 per cent during the first nine months of the year. For instance, raw cotton imports declined by 24.9 per cent, imports of textiles and articles lowered by 8.2 per cent, staple fiber by 6.1 per cent, and dyeing and tanning materials by 3.1 per cent. Bangladesh’s imports expenditure also declined to $12.17 billion during the year from $13.39 billion the previous fiscal year.
Exporters attribute this rise in popularity of imported yarn to its lower cost compared to locally produced yarn. On the other hand, high utility costs and unreliable gas supply are driving up local yarn prices, add textile millers. Syed Nurul Islam, Chairman and CEO, Well Group, notes, a decrease in raw materials imports including raw cotton and staple fibers inevitably led to an increase in yarn imports during the year.
Also a director of the Bangladesh Textile Mills Association (BTMA), Islam emphasises, the rise in Bangladesh’s production costs due to high utility costs and gas shortages is preventing textile millers from utilising their full production capacities, thereby reducing the competitiveness of local yarn. Consequently, garment exporters continue to source cheaper yarn from India, Pakistan, and China under bonded warehouse facilities.
For the sustainability of the garment industry, Islam emphasises on the need for strong domestic supply chain support and government policy intervention. Faruque Hassan, Former President, BGMEA, agrees, the industry needs to boost local consumption and attract more garment work orders, he says.
SM Mannan Kochi, President, BGMEA, explains, the rise in prices of local yarn makes them less competitive despite cash incentives from the local market. Mohammad Ali Khokon, President, BTMA, alleges, various policy supports from their governments and their own cotton production enables foreign competitors to sell yarn at ‘dumping prices.’
To retain US dollars within the country, the industry needs to increase local yarn sourcing, affirms Khokon. Many local textile mills may be forced to close if the current trend continues, he warns. Currently, local textile mills supply about 80 per cent of knitwear sector’s demand for yarn and 35 per cent of woven sector’s need for the material in Bangladesh, reveal industry insiders.
During Jul-Mar’23-24, Bangladesh exported RMG products worth $37.20 billion. Of this, knitwear exports contributed $21.01 billion and woven products $16.19 billion, data from Export Promotion Bureau (EPB) shows. The country exported RMG products worth $47 billion in FY 2022-23.
