Textile millers have urged the government to make use of 70-percent local cotton yarn in export-oriented garment manufacturing mandatory for an interim period.
They made the suggestion with an eye to retaining foreign currency amid a dearth of dollars and boosting garment value addition.
In a letter to the revenue board on December 12, BTMA president Mohammad Ali Khokon outlined the proposal.
However, the proposal has drawn opposition from apparel exporters as they argued that the move would undermine their competitiveness on the global market.
The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), which sources most of its yarn and fabrics domestically, has expressed reservations about any such conditions on import.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) also stands opposed to such proposal, saying that local spinners were not fully capable of meeting their requirements of all types of yarn.
In the letter, the BTMA claimed its member-mills could meet 85 per cent of the demand for the export-oriented ready-made garment (RMG) industry.
Although mills can produce export-quality cotton yarn, according to Mr Khokon, the industry imports large quantities of cotton-carded and combed yarn through bonded- warehouse facility as it requires huge dollars.
"If the locally produced cotton yarn is sourced or used, value addition will be more than 65 per cent against only 20-25 per cent of imported ones," he cited.
Mr Khokon urged the NBR chairman to make the use of at least 70-percent local yarn mandatory for exporters through back-to-back letters of credit for an interim period.
The BTMA also proposed release of yarn consignments after ensuring compatibility of the imported yarn only to discourage such imports showing 'unusual' prices.
It argues that price difference of local and imported yarn is not more than 15-25 cent per kg as Bangladesh imports raw materials - cotton and other components.
The BTMA further proposed installing equipment to measure the count of yarn at ports and recruiting more manpower with required training in this regard.
According to the BTMA, Bangladesh imported 0.793 million tonnes of yarn in the fiscal year (FY) 2022-23, which was 0.588 million tonnes in FY20.
When asked, BKMEA vice-president Fazlee Shamim Ehsan opposed the BTMA plea, binning any such condition as local spinners could not meet the export sector's full demand for yarn and fabrics.
"We usually source yarn carded or combed from local spinning mills even though the price difference is in many cases up to 25 cents per kg," he argues.
"Textile millers can't supply all the required yarn, especially the polyester ones," said Mr Ehsan, adding that they could supply only 10 per cent of such yarn.
Procurement of materials depends on demand, prices and quality, according to the BKMEA leader.
"The price of yarn in local mills is always higher than that of the international market. There are instances that when the demand for yarn goes up, local spinners increase prices at their sweet will citing the demand-supply theory."
Bangladesh Terry Towel and Linen Manufacturers and Exporters Association former chairman Shahadat Hossain Sohel also echoed Mr Ehsan's view on the issue.
He alleged that it could not be accepted if the price difference was more than 50 cent or in some cases 1.0 dollar per kilo.
Citing the recent central bank data, BGMEA president Faruque Hassan said value addition had increased over 70 per cent in recent times, reflecting the use of local raw materials.
"In a free-market economy, no conditions should be applicable or accepted," Mr Hassan told the FE.
Local yarn and fabric makers have to be price-competitive as the sector would not get incentives after LDC graduation, he noted.
The government allowed apparel exporters to import yarn from India partially through Benapole, Bhomra, Sonamasjid and Banglabandha land ports in January 2023 amid protests from the BTMA.
But exporters could previously import yarn fully through Benapole under the bonded-warehouse facility.
In FY23, Bangladesh received $42.61 billion from RMG exports, including $23.21 billion and $19.39 billion from knitwear and woven items respectively.
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