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Bangladesh: High dependency on imports hindering woven garments growth

"Though value addition by the woven sub-sector is much lower than that of knitwear, it is the largest foreign currency earner for Bangladesh. The country earned $14.73 billion from woven garment exports while knitwear fetched $13.35 billion in the last fiscal year FY2015-16. Earning from RMG sector stood at $28.09 billion, 80 per cent of the total export earnings in the last FY, reveal data."

 

 

Bangladesh High dependency on imports hindering woven garments growth

 

Though value addition by the woven sub-sector is much lower than that of knitwear, it is the largest foreign currency earner for Bangladesh. The country earned $14.73 billion from woven garment exports while knitwear fetched $13.35 billion in the last fiscal year FY2015-16. Earning from RMG sector stood at $28.09 billion, 80 per cent of the total export earnings in the last FY, reveal data.

However, Bangladesh's woven garment sub-sector, unlike the knitwear, has failed to enhance value addition to the desired level over the years mainly due to the former's large dependence on imported fabrics. Woven garment makers are now able to add value to the extent of 35 to 40 per cent as they still need to import around 60 per cent of their fabrics requirements from abroad. Local textile millers, on the other hand, supply nearly 90 and 95 per cent of the required yarn and fabric to knitwear industry.

Bringing textile heritage to the to fore

Bangladesh High dependency on imports hindering woven garments

 

Entrepreneurs are increasingly moving towards backward linkages, especially in accessories, fabric for denim items and washing segment. Still larger part of the requirement of fabric is met with imports as the industry is huge capital intensive while scarcity of power is also a major obstacle to drawing investment in the sub-sector, they observed. Huge investment is required to set up a woven fabric unit while a knitwear unit can be established with comparatively less money, explains Faruque Hassan, Senior Vice-President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Lack of fresh investment due to power shortage is marring the fortunes of the industry. There is also a suspension on gas connection to new industrial units, knowing that gas supply is a must for fabric manufacturing for its sustenance. However, the country enjoys duty benefit in many of its major markets including European Union though fabric for woven items is imported. The government provides cash incentive for using local raw materials, which helps flourishing of the backward linkage industry for the knitwear sector.

Changing Scenario

Recent years have seen improved scenario due to the integrated growth of spinning units with growth of country's stitching capacity and increased demand for yarn and fabric. There are some new additions in the knitwear such as lingerie and sportswear. Value addition is majorly happening in denim with around 30 fabric companies having their base in the country. There are 413 yarn manufacturing mills that spin 2,250 million kms of yarn annually, 792 fabric manufacturing units including 30 denim and 22 home textile with 2810 million metres capacity and 240 dyeing units having fabric processing capacity of 2720 million metres, according to BTMA. The country imported about 5.5 million bales of raw cotton in 2015.

Domestic companies are capable of meeting the demand for accessories like zippers, buttons, labels, hooks, hangers, cartoons, thread, by upto 90 per cent, helping the country reduce its dependence on imports. Bangladesh initially imported accessories from China, Hong Kong, Singapore, Japan and India. The backward industry contributes 15 per cent to the total garment exports.

 
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