Entrepreneurs and leaders of BGMEA, BKMEA and BTMA have called on the government to adopt a balanced tariff policy to resolve the ongoing dispute over yarn imports, aiming to make both the readymade garment (RMG) and spinning sectors more competitive in the export market.
The call came during a meeting at the Bangladesh Trade and Tariff Commission (BTTC) on Thursday. The meeting was held in the wake of conflicting demands from spinners and apparel manufacturers regarding the imposition of a safeguard duty on yarn imports.
Earlier, spinners had requested the government to impose a safeguard duty on yarn imports or exclude yarns in the 10 to 30 count range from the duty-free import bond facility.
However, apparel and knitwear manufacturers strongly opposed this proposal. They warned that a 20 per cent safeguard tariff on imported yarn, as suggested by local spinners, would significantly increase production costs for RMG exporters and ultimately hurt exports.
Local spinners, however, maintained that the safeguard duty is necessary to protect the domestic industry. In the last week of December, they accused India of dumping cheap yarn in Bangladesh and said they were sitting on Tk 120 billion worth of unsold stock.
Following these arguments, the Bangladesh Trade and Tariff Commission -- the statutory body responsible for preventing dumping of foreign goods -- convened the meeting with spinners and RMG exporters.
BGMEA, BKMEA and BTMA leaders, including Shamim Islam, BTMA Vice President; Md. Saleudh Zaman Khan (Jitu), Managing Director of NZ Tex Group; former BTMA Director Razib Haider Munna; BTMA Director and Managing Director of Badsha Group Badshaha Mia; NR Group Managing Director Mokhlesur Rahman; BGMEA First Vice President Selim Rahman; BGMEA Vice President Shehab Udduza Chowdhury; BKMEA President Mohammad Hatem and BKMEA Executive President Falee Shamim Ehsan, were present at the meeting.
Meeting sources said BTMA leaders warned that if the government does not exclude yarns in the 10 to 30 count range from the duty-free import bond facility, the local spinning industry will not be able to survive.
They noted that Indian spinners offer yarn at prices 40-50 cents per kilogram lower than Bangladeshi production costs due to government subsidies, creating uneven competition and putting local spinners at a disadvantage.
Talking to The Financial Express, former BTMA Director Razib Haider Munna said that by relying on imported yarn, Bangladesh would not be able to maintain double-stage value addition, which will become mandatory after graduation from least developed country (LDC) status.
"Considering this, we have requested the government to exclude those types of yarn that Bangladesh has the full capacity to produce -- 100 per cent cotton yarn, polyester-cotton yarn, and carded cotton yarn," he said.
Speaking to The Financial Express after the meeting, BKMEA President Mohammad Hatem said that earlier the three associations had reached a consensus while considering the interests of local spinning mills.
He said their main objective is to protect local spinners. Under the current duty-free import policy, foreign companies have benefited for a long time. However, while protecting local spinners, the impact of any safeguard duty on BGMEA and BKMEA member industries must also be considered. Solutions should ensure a win-win outcome for all stakeholders.
He also mentioned that excluding certain yarns from the bonded facility would benefit SME members of BKMEA, as nearly 50-60 percent of its members are SMEs and are unable to use the bonded warehouse facility to import yarn duty-free.
"This exclusion will make them competitive with bonded-facility users during negotiations with buyers," he added.
He further said challenges arose when the government initiated cuts to cash incentives on locally produced yarn used in apparel exports.
Now, he said, the government may consider alternative support measures for spinners to protect the sector, which would be a win-win situation for all.
The BKMEA president also proposed that re-fixing the incentive from the current 1.5 per cent to 5 per cent would help domestic mills and encourage higher local value addition, which is becoming increasingly important due to the newly imposed US reciprocal tariffs.
Mr Hatem also noted that under WTO rules, countries are allowed to provide such subsidies during a three-year grace period after graduating from LDC status.
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