According to figures from the National Board of Revenue, Bangladesh’s imports of cotton yarn increased by 39% in 2024, hitting a record high of $2.28 billion. Knitwear manufacturers increased their imports of fabric by 38% at the same time, spending an additional $2.59 billion. India, which is becoming a very strong competitor in the ready-made garment (RMG) market, accounted for an astounding 80% of these imports.
The attractiveness of foreign yarn appears to be indisputable at first glance. According to knitwear makers, Indian yarn delivered to Chattogram port costs $2.19 per kilogram. On the other hand, a kilogram of locally spun yarn costs $2.45. The roughly 10% price difference instantly tips the scales in favor of imports. Is it that easy, though? This pricing difference has hidden dynamics that become apparent upon closer inspection.
Although the price of $2.19 per kilogram seems reasonable, importers incur large additional costs. The cost is increased by the transportation from Chattogram port to the manufacturing centers in Ashulia, Gazipur, Narayanganj, and Narsingdi. Additionally, importers are burdened with expenses for insurance, confirmation, and opening letters of credit (LCs).
Another difficulty is managing inventory. Local vendors can assist in avoiding the storage and handling expenses associated with imported yarn and fabrics, which are usually ordered in bulk. Additionally, clothing created with yarn that is produced locally is eligible for a 1.5% cash incentive, which is not available for imported equivalents.
Additionally, local spinning mills provide unparalleled adaptability. Two truckloads of yarn can be ordered by a clothing manufacturer and delivered straight to their plant, saving money on transportation. Additionally, extensive credit terms are frequently offered by local suppliers, enabling clothing manufacturers to postpone payments for up to two months following delivery.
Therefore, the argument is about balance rather than just price. Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), asked, “How much should Bangladesh rely on imports, and at what point does it start eroding the resilience of its own industries?” BTMA President Russell called the previous government’s decision to allow Indian yarn imports through land ports, under Sheikh Hasina’s leadership, a “disaster” for the nation’s textile sector.
“Yarn import from India through land ports should be immediately banned as these ports lack the necessary infrastructure to prevent misdeclaration,” stated the president of BTMA. “Stricter accountability measures make it less problematic to allow imports via sea ports,” he continued.
Russell urged the interim government to revert to the previous administration’s regulations and prohibit the importation of yarn through land ports. Investment data shows how dire the textile industry is. There are 519 yarn and 938 fabric production mills in the business, with a combined investment of more than $25 billion, according to the BTMA. In sharp contrast to 2022, when 14 new mills were created at a cost of over Tk4,000 crore, no new investments were made in 2023 or 2024.
Even with all benefits, foreign yarn is still less expensive overall. Hatem said, “Even if transportation, clearing and forwarding (C&F), and insurance costs are added, imported yarn is still less expensive than locally-produced yarn.”
Source: The Business Standard
