Spinning mills on brink: BTMA urges govt action within 72 hours to protect sector, pushes for safeguard duty on imported yarn

Highlights:

• 137% surge in yarn imports from India over the past 22 months
• $2b yarn imported from India in one year
• Nearly 100 textile mills effectively shut
• Tk12,000cr worth of unsold yarn stock piling up at spinning mills
• BTMA demands 10% production support incentive for locally produced yarn
• Proposes safeguard duty: $0.30–$0.35 per kg on imported yarn

The Bangladesh Textile Mills Association (BTMA) has urged the government to take an urgent decision within the next 72 hours to protect the country's crisis-hit textile sector, particularly spinning mills, warning that ineffective policies and continued inaction could lead to widespread closures.

BTMA leaders say Indian yarn exporters are selling yarn in Bangladesh at "dumping" prices, benefiting from various government incentives in India and undercutting local producers by about $0.30 per kilogramme. This, they argue, has created severe unequal competition for Bangladesh's spinning mills.

Speaking at a meeting at the Gulshan Club in the capital today (28 December), BTMA President Showkat Aziz Russell said immediate steps were needed to save the sector. "A decision should come within the next 72 hours," he said.

As emergency measures to protect the textile sector, the BTMA has proposed a 10% production support incentive on the selling price of yarn produced by local spinning mills. It has also called for the imposition of a safeguard duty of $0.30 to $0.35 per kilogramme on imported yarn.

Other demands include setting conditions to increase local value addition, restoring the Export Development Fund (EDF) loan limit to its previous level, and extending the loan repayment period.

Russell said the crisis had already forced him to shut down one of his five textile mills and that he was now looking for ways to close the remaining ones.

"If this continues, someday you may see a BTMA president without any textile mills," he said.

He blamed the situation on what he described as dumping by India, saying Bangladesh's spinning mills were losing out in an uneven market. 

According to him, 50 factories have already shut down, while another 50 are operating at reduced capacity. Taken together, he said, nearly 100 textile mills have effectively closed because they could not survive the competition.

Citing import data, Russell noted that yarn imports from India had risen sharply. "In 22 months, yarn imports from India have increased by 137%," he said.

Mills selling below cost

Bangladesh currently has more than 500 yarn-producing mills. Industry owners say many are being forced to sell yarn at prices below their production costs, worsening financial losses. Against this backdrop, the BTMA organised the meeting to outline the sector's challenges and press for immediate policy support.

Responding to journalists' questions, Russell said spinning mills are currently holding unsold yarn stocks worth around Tk12,000 crore. 

Other textile entrepreneurs at the meeting also highlighted that India is exporting yarn to Bangladesh at prices lower than those in its own domestic market.

Mohammad Ali Khokon, a former BTMA president, said, "India is dumping subsidised yarn in our market, but we do not have an effective anti-dumping policy. On the other hand, India is giving various incentives to protect its own industry, even announcing direct subsidies for land, electricity and wages in the garment sector."

Calling for bold government action, he added: "This sector has now gone into the ICU. To bring it back, the government must take big decisions."

'Not about subsidy, but survival'

Another former BTMA president, A Matin Chowdhury, said investors had poured large sums into the textile sector based on government policies and assurances.

"So policies must ensure that we can compete on an equal footing with our rivals," he said.

He noted that Bangladesh had offered duty-free import facilities in the interest of exports, while competing countries were supporting their exporters with subsidies and incentives. "If these are not countered, competition will become unequal for us," he said.

Matin also called for tighter control on the import of yarn that can be produced locally, along with financial and policy support to counter what he described as unfair competition.

"This is not about subsidies, it is about survival," he said.

Energy prices, import dependence

Raising concerns over energy costs, Russell questioned why domestic gas prices had not been adjusted downward despite a significant fall in global gas prices.

"When global gas prices rise, prices are increased here. But when global prices fall, why are they not reduced? Global gas prices are now at their lowest," he said.

He warned that if Bangladesh's textile mills shut down, the country could face serious consequences in the future, recalling past instances when India halted cotton and yarn exports to Bangladesh.

Stressing the need for self-reliance, he said Bangladesh should not become overly dependent on imports.

Referring to his own company's experience exporting RC cola to Kolkata, Russell said, "When we started exporting RC cola to Kolkata, within 15 days they changed the tax rate."

"India must be made to understand that if it wants friendship, it must act like a friend. But past governments and ministers failed to do that," he added.

'We are victims of economic aggression'

Razeeb Haider, a former BTMA vice-president, described the situation as "economic aggression" by India.

He said the actual production cost of Indian yarn was about $3 per kilogramme, but it was being exported at $2.5. As a result, foreign buyers of Bangladesh's garment industry were nominating Indian exporters as yarn suppliers.

He said Bangladesh imported about $2 billion worth of yarn from India in a single year and warned that 44% of India's yarn exports now go to the Bangladeshi market.

"We are on the brink of destruction," Razeeb noted. "If this aggression continues, the wheels of the country's economy will come to a halt. To stop this, we need strong policy support from the government."

He also proposed imposing restrictions on duty-free yarn imports under bonded warehouse facilities.