Any option for home textiles exporters?

FE Team | Published: February 24, 2019 20:41:52

Export of home textiles from the country is facing difficulties and with the passage of time things are becoming increasingly difficult for the local manufacturers and exporters to ride out the crisis. The very fact that export of home textiles comprising mainly terry towels and bed sheets is in a bad shape is evidenced from the abundance of these products in street shops sold at throwaway prices. Bundles of terry towels have lodged on the shoulders of hawkers at busy road intersections of the capital and elsewhere instead of being packaged to be cotainerised for export to North America and the EU countries.
Home textiles include mainly terry towels, bed sheets, linen, curtains and pillow covers. Terry towel, the most important segment, is experiencing the shock most of all. Terry towel export declined 4.40 per cent year-on-year to $42.35 million in the last fiscal year, according to the Export Promotion Bureau data. The sector's growth started to witness a decline from January 2014, when the European Union (EU) allowed zero-duty benefit to Pakistan under its GSP-Plus scheme on export of home textiles and some other products. As a result, the impact is too severe for the local manufacturers and exporters. Around a dozen small and medium factories have reportedly been shut down. Currently, ninety factories are in operation and most are staying in business in the hope that they might find alternative markets elsewhere.
A relatively new item in the country's export basket, terry towel demonstrated great promise due mainly to the easier production process and market access made easy by the EU's EBA (Everything but Arms) scheme allowing duty free facility to all LDC exports, except arms. Coupled with it, there is the preferential duty facility under the EU GSP scheme meant only for LDCs like Bangladesh. The scheme has been revised a few years ago and dubbed GSP-plus with a major shift in its eligibility criterion. The GSP-plus scheme is an extension of the GSP system, in that it includes developing countries also as eligible to avail the benefits of preferential duty -- provided they have proved their commitment to sustainable development and good governance. Most duty rates are 'zero' under this scheme. So, it is clearly the erosion of competitive advantage that Bangladesh has been enjoying as an LDC for so long. Extension of the facility to exporters of developing countries like Pakistan and Sri Lanka, among others, has exposed Bangladeshi exporters to fierce competition from these countries, especially Pakistan which as a traditional home textile producing country is now in a more advantageous position to increase its products-particularly terry towels.
There is apparently no option but to be increasingly competitive for the Bangladeshi terry towel producers to stay in business. Sector insiders are of the opinion that facilitation in respect of cotton procurement might lower the present production cost. Also, exploring the market segments in overseas markets could result in finding better avenues for export. The government in consultation with the sector people may consider taking some facilitating steps as well.