The Bangladesh Textile Mills Association (BTMA) has urged a temporary halt to imports of cotton yarn used in the country's readymade garment industry to retain foreign exchange and boost apparel value addition amid a dollar crunch.
In a letter to the Bangladesh Bank governor on 3 April, BTMA president Mohammad Ali Khokon outlined the proposal, which he argues will reduce their competitiveness in global markets. BTMA claims that around 510 local spinning mills, with a production capacity of 3600 million kg of cotton yarn, can meet 70% of the demand of the export-oriented apparel industry. He also mentioned that "if locally produced cotton yarn is sourced or used, the value addition would be up to 60% as against 30% value addition for imported ones."
Bangladesh 100% Enabled
Khokon urged the central bank governor to take measures to prevent back-to-back letters of credit (LC) for cotton yarn imports, adding that Bangladesh is 100% capable of producing cotton yarn. According to BTMA, Bangladesh is expected to import 0.543 million tonnes of cotton yarn in 2022, up from 0.297 million tonnes in 2019. which sources most of its yarn and fabric domestically, has expressed reservations about any restrictions on imports.
BKMEA protested
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), working president Mohd Hatem opposed the BTMA's plea saying there should be no ban as local spinners cannot meet the entire demand of the export sector for yarn and fabric. As a result, he said, apparel exporters have to import yarn and fabric, while buyers sometimes nominate essential raw materials from abroad, especially China. "We usually import spun or combed cotton yarn from local spinning mills, even though the difference in prices is 30 to 50 cents per kilogram," said Mohammad Hatem.
need to maintain competition
If the gap is bridged, exporters source locally to meet immediate shipment deadlines, it takes a week to get raw material from local sources while imports take 30-45 days, he said. It seems "We import the rest which is normal and cannot be restricted in a free market economy and to maintain competition," he said.
here comes the difference
The government in January this year allowed the country's apparel exporters to import yarn from India in partial shipments through Benapole, Bhomra, Sonamsjid and Banglabandha land ports amid protests from BTMA. RMG exporters could earlier import yarn through Benapole land port under bonded warehouse facility but they were not allowed to make part shipments.
Understand like this-
In the last financial year, Bangladesh received US$ 42.61 billion from RMG exports, of which US$ 23.21 billion and US$ 19.39 billion came from knitwear and woven goods, respectively. According to BTMA, textile mills meet 80% and 35%-40% of the knitwear and woven sectors' yarn and fabric demand. Data from the central bank showed that value addition in the sector declined to 54.38% in the last fiscal from 64.32% in fiscal 2019, mainly due to higher imports of raw materials.
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