Commerce ministry seeks bond facility suspension for 10-30 count yarn imports
Instructions have been requested to be issued to the concerned customs houses to ensure that the cotton yarn count is clearly mentioned in the commercial description in the import bill of entry
The Ministry of Commerce has requested the National Board of Revenue (NBR) to suspend duty-free import benefits for specific counts of yarn under the bonded warehouse scheme.
In a formal letter sent to the revenue authority on 12 January, the ministry recommended the cancellation of the bond facility for the import of yarn ranging from 10 to 30 count to safeguard local textile millers.
Contacted, NBR officials said they haven't issued any orders yet, to this end.
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In addition to the letter, instructions have been requested to be issued to the concerned custom houses to ensure that the cotton yarn count is clearly mentioned in the commercial description in the import bill of entry.
In the textile industry, the "count" of yarn is a technical measure of thickness and fineness. Yarn within the 10 to 30 count range is classified as medium to coarse and serves as a vital raw material for the country's massive knitwear sector.
The duty-free import benefit has been withdrawn for certain yarn counts, the primary users of which are the country's knitwear garment exporters.
Exporters say that as a result, importing yarn will now require paying nearly 40% in import taxes. This will impact more than half of the country's ready-made garment exports.
Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Business Standard that due to the government's decision, local yarn manufacturers have already started holding them hostage.
Some have temporarily stopped taking yarn orders altogether.
He believes the commerce ministry has taken this decision in an arbitrary manner.
The interim government has been weighing a range of policy options – including tighter import controls, curbs on duty-free yarn imports and incentives to encourage the use of locally produced yarn – as it comes under growing pressure to protect domestic spinning mills from a surge in imported yarn, particularly subsidised supplies from India.
Officials from the Bangladesh Trade and Tariff Commission (BTTC) met representatives of the Bangladesh Textile Mills Association (BTMA) and the country's two garment exporter bodies in Dhaka early this month. While participants broadly agreed on the need to safeguard the textile value chain, no decision was reached amid sharp differences between mill owners and garment exporters.
"We are studying the issue and working on it," Commerce Secretary Mahbubur Rahman recently told The Business Standard when asked whether the government was considering import restrictions to protect local textile industries.
Bangladesh's RMG sector, the world's second-largest exporter, has developed significant backward linkages over the years.
Local textile mills now meet about 60% of the demand for woven fabrics and almost the entire yarn requirement of the knitwear sector.
Despite this, spinning mills have been under severe financial stress for more than a year, often selling yarn below production cost to remain competitive.
