Spinners irate over low yarn sales

The sale of yarn and finished fabric from the local mills declined substantially in the first three months of 2011 because of high imports of the items by the garment exporters, said spinners yesterday.

Yarn remains unsold at the local mills because India has sold the item at dumping rates, spinners added.

Sales also declined substantially on imports from China, said Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA), at a meeting with Jute and Textile Minister Abdul Latif Siddiqui at his secretariat office.

The apparel makers used to purchase fabric from the local mills to enjoy the duty-free access from European Union (EU) previously, but now they can get the same zero-duty facility from imported fabric for changes to the rules of origin (RoO) by EU under the generalised system of preferences (GSP) that went into effect from January, Alamin said.

The EU relaxed the RoO for the least developed countries (LDCs) and being a member of the LDCs, Bangladesh is also enjoying the facility. As a result, the local garment manufacturers are importing fabric from China.

At present, local millers can meet 90 percent of demand for the knitwear sub-sector and nearly 40 percent for the woven sub-sector, he said.

The import of finished fabric increased by 88 percent in January-March, after the RoO was relaxed, he said.

Alamin said by stopping the sale of raw cotton for several months now, India is now selling yarn at low prices to dump into the Bangladeshi market, he said.

"A total of 356 spinning mills produce 3,000 tonnes of yarn a day for local consumption. But over the last three months, that quantity is not being sold and stockpiles are increasing day-by-day," he said.

The spinners are now offering 30-count yarn at $5 a kilogram, which sold at $7 even one month ago, he said.

The spinners are unable to sell yarn at the lower prices, as they had bought cotton at higher prices last year, although cotton prices declined significantly in the last two weeks.

The government should either increase the cash incentives to 15 percent from an existing 5 percent, or set higher duties to discourage imports, he added.

At the meeting, Salim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association and Siddiqur Rahman, acting president of Bangladesh Garment Manufacturers and Exporters Association, opposed the option of cash incentives for the spinners.

Osman said the situation will normalise when demand from the manufacturers will increase.

The textiles and jute minister said the 88 percent increase in import of fabric is alarming. "But I do not think our spinning sector will be affected, as the situation is temporary.''

He said the government will not increase cash incentive at the moment. "I do not think the time has come to give any stimulus package for the survival of the spinning sub-sector," Siddiqui said.

The minister said he called upon the leaders of the three associations to create an environment of discussion and solve the problems though mutual understanding.

"If necessary, I will arrange further meetings between the leaders to resolve the problems. But I will not interfere.''