Knitwear’s stake in RMG exports rising

The knitwear sub-sector's contribution to the country's readymade garment (RMG) export earnings is gradually increasing over the years, making it the top foreign currency earner in the last fiscal, industry insiders said.
They attributed the growth to the strong backward linkage industry, its capacity to make quick delivery of products and government's policy support, among others.
An analysis of data from the Bangladesh Bank, Export Promotion Bureau and apparel trade bodies showed that the country fetched US$21.51 billion from readymade garment (RMG) exports in FY '12. Of the amount, 38.76 per cent came from knit items.
The share in FY '22, when the overall RMG exports reached $ 42.61 billion, stood at 44.57 per cent.
On the other hand, the share of woven items in the export earnings gradually declined to 37.25 per cent now from about 41 per cent during the last one decade.
The exporters of woven items blamed absence of required backward linkage in the segment as the demand for woven fabric is mostly met through imports resulting in a long lead time.
Knitwear exporters said the government policy supports like the cash incentive and utility have helped the entrepreneurs to invest in the sub-sector including the backward linkage yarn, fabric and dying segments.
Besides, changing patterns in fashion and buyers' preference to quick delivery of products due to long lead time caused by Covid-induced lengthy transportation also pushed buyers to source knit items from the country, they added.
T-shirt, jersey, pullover, men, women and boy's trousers, men or boys' shirts are the major knit items mainly shipped to the European Union (EU), according to the industry people.
When asked, Fazlul Hoque former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said the backward linkage industry is one of the main reasons behind the growth of the sub-sector over the years.
The exporters of knit items can source fabric that constitutes 60-80 per cent of garment items from the local market, facilitating them to reduce the lead time, he said.
During the Covid pandemic, when buyers placed their orders within the shortest possible time, the backward linkage industry supported to retain and enhance the buyers' confidence, he said.
He added that the buyers used to observe the fashion trend and place orders lately, but want possible quick delivery.
"We ensured this quick delivery while maintaining the quality," Mr Hoque, also managing director of Plummy Fashions Ltd, told the FE.
The composite units having their own knitting, dying, sewing and finishing facilities are other strengths of the country's knitwear sub-sector, according to industry people.
After the tragic industrial accidents like Tazreen and Rana Plaza building collapse, the buyers became more cautious about safety, they said.
Renowned brands and retailers now prefer their sourcing units to have more integrated facilities like washing, printing and embroidery on either same premise or under single ownership mainly to ensure compliance in their whole supply chain, they said.
They added that entrepreneurs had re-invested their profit that also helped flourish the sub-sector and become self-sufficient.
According to BKMEA and Bangladesh Garment Manufacturers and Exporters Association (BGMEA), there are more than 400 composite units across the country.
Echoing Mr Hoque, Bangladesh Textile Mills Association additional director Monsoor Ahmed said local spinners can meet about 80-90 per cent requirement for knit fabric.
On the other hand, the association members can supply only 35-40 per cent of woven fabric while more than 60 per cent demand is met through imports, he said.
Talking to the FE, MA Rahim, vice chairman of DBL Group, said they invested phase by phase in knitting, dying and later spinning mainly because of the cash incentive which they used to receive up to 25 per cent.
The government scaled back the support gradually, which now stands at 4.0 per cent only, he said, adding the sector would be fully self-sufficient if the government re-consider the incentive issue and increase the rate.
DBL Group that manufactures knit items mostly T-shirts and jackets annually exports the items worth around US $470 million, one of the highest in this segment.

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