Yarn import decision draws near after delay

FE REPORT
After more than five months of deliberations, the Bangladesh Tariff Commission (BTC) is yet to reach a final decision on the contentious yarn-import issue, though a report is now expected within days.
Sources said the commission is likely to recommend excluding 10-30 count yarn from duty-free imports under the bonded warehouse facility, a move closely watched by both spinners and apparel exporters.
The prolonged delay reflects deep divisions within the industry, with domestic spinners seeking stronger protection against imports, while exporters warn that any restrictive measures could undermine Bangladesh's competitiveness in global apparel markets and disrupt buyer-nominated supply chains.
Officials said the delay has been caused by stark differences between spinners and apparel exporters.
Local spinners have strongly demanded the imposition of a 20 per cent safeguard duty on yarn imports to protect domestic spinning mills.
Apparel exporters, however, have warned that such measures would raise production costs and could prompt international buyers to shift orders to competing countries.
Exporters also noted that several buyers have nominated Indian spinners as yarn suppliers due to their lower production costs, raising concerns that restrictions on yarn imports could disrupt supply chains and weaken export competitiveness.
A senior official of the Bangladesh Textile Mills Association (BTMA), however, said excluding a limited number of yarn categories from duty-free imports would not significantly benefit local spinners.
Sources at the BTC said six meetings have been held with stakeholders, including spinners and apparel exporters, since September last year.
Four of those meetings were chaired by former chairman Dr Moinul Khan, while the matter is now under review by Acting Chairman Md Abdul Gafur.
Speaking on condition of anonymity, a commission official said the recommendations are expected to be submitted by today (Tuesday), taking into account the interests of both spinners and apparel exporters.
The Financial Express was unable to reach the acting chairman for comment.
A senior official of a leading textile group said the spinning sector is facing severe challenges as orders continue to decline.
He attributed the downturn to month-on-month negative growth in apparel exports over the past five months, a trend he said could persist for another three to four months.
He also noted that apparel orders typically fall by 25-30 per cent during election periods. In addition, Indian spinners are selling yarn below production costs due to government subsidies, which he said is hurting Bangladesh's textile industry.
The official further pointed out that the recent hike in gas prices has significantly eroded the competitiveness of local spinners and urged the government to provide gas subsidies to help them survive in the export-oriented market.
Meanwhile, apparel exporters have proposed restoring the earlier 4.0 per cent cash incentive for using local yarn, which has since been reduced to 1.5 per cent, to support domestic mills.
BKMEA Executive President Fazlee Shamim Ehsan said imposing safeguard duties or excluding yarn from the bonded warehouse facility would raise production costs and hurt apparel exports by forcing manufacturers to buy higher-priced local yarn.
"Imposing a safeguard duty is not an effective way to encourage the use of costlier local yarn. Some buyers have already expressed concerns over such moves," he said.
Mr Ehsan also said exclusion from bonded facilities would negatively affect apparel exports, adding that Bangladesh's duty drawback process remains complicated and costly due to various miscellaneous charges.
He noted that there is a 30-50 cent production cost gap between Indian and Bangladeshi yarn and urged the government to consider alternative incentive measures rather than tariffs.
newsmanjasi@gmail.com