Why garment makers are turning to Indian yarn despite local surplus

Bangladesh's textile sector is facing a deepening crisis as local mills struggle to sell yarn and fabric, with garment makers increasingly turning to Indian alternatives.

How cheaper Indian yarn throws Bangladesh textile out of competition

Here's why:

Indian subsidies shifting balance: India's generous export incentive schemes give its yarn exporters a price edge of about $0.30 per kilogramme over Bangladeshi producers, according to industry estimates.

Reduced support for local mills: Bangladesh's cash incentives for textile exporters have dropped from 4% to 1%, while production costs continue to rise due to higher utility and financing expenses.

Widening price gap shifts buying patterns: The price of 30-count local yarn stands at around $3.00 per kg, compared to $2.70 for Indian yarn — a gap wide enough to push most garment makers to switch suppliers.

Savings drive purchasing decisions: Factory owners say a $0.30 per kg saving can determine profit margins. Many who once relied entirely on local mills now import up to 90% of their yarn from India.

Indian exporters benefit from multiple incentives: Experts say Indian exporters receive extra cash through schemes like the Remission of Duties and Taxes on Exported Products (RoDTEP) and other energy and capital subsidies.

Policy imbalance discourages local sourcing: Garment makers argue that the difference lies in government policy, not quality — India rewards its exporters, while Bangladesh has reduced incentives for domestic consumption of local yarn.

Allegations of dumping: Industry leaders claim some Indian exporters sell yarn below their own domestic prices, effectively "dumping" in Bangladesh's market and undercutting local mills.

Bond misuse worsens local oversupply: Local producers say illegal imports and misuse of bonded warehouse facilities add to the problem, flooding the market with cheaper, untaxed yarn and fabric.

Stockpiles and production cuts across mills: With warehouses overflowing, many spinning mills have halted partial production. Some report over 50% of yarn unsold, forcing them to store stock inside factories.

Diminished demand in downstream sectors: Dyeing and finishing units are running below 50% capacity as local yarn use drops. Owners blame the reduced cash incentive for further weakening domestic demand.