Business groups at odds over import of Indian yarn

Textile mill owners and ready-made garment (RMG) factory owners have taken opposing positions over the proposal to impose a 20 per cent safeguard duty on yarn imports from India to protect domestic spinning mills. As a result, the process of imposing duties on yarn imported from the neighbouring country has faced an early setback.

Leaders of the Bangladesh Textile Mills Association (BTMA) argue that Indian spinning mills receive government incentives and are therefore exporting yarn to Bangladesh at lower prices.

This, they say, has led to declining sales for Bangladeshi spinning mills and even forced some mills to shut down. On the other hand, leaders of the garment manufacturers’ associations—the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)—argue that imposing restrictions on Indian yarn would reduce the competitiveness of the garment industry.

Bangladesh’s export-oriented ready-made garment industry relies heavily on yarn imported from India. While Bangladeshi mills sell 30-count yarn at around USD 3 per kilogramme, Indian producers sell the same yarn at USD 2.60. It is primarily because of this lower price that Bangladeshi entrepreneurs import yarn from India.

BTMA President Showkat Aziz said at a press conference last month that large volumes of low-priced yarn are being imported from India, putting Bangladesh’s spinning mills under severe pressure. He claimed that unsold yarn worth around Tk 120 billion is currently lying idle. On that occasion, he called for the imposition of a safeguard duty, a 10 per cent cash incentive, and several other forms of support to protect local spinning mills.

When contacted, BKMEA President Mohammad Hatem said, “We have no disagreement about protecting domestic industries. If spinning mills shut down, the garment industry will also suffer. That is why the government must provide policy support.”

Since last year’s political changes, diplomatic relations between Bangladesh and India have not been smooth. In April, the Bangladesh government stopped yarn imports from India through land ports, allowing imports only via sea routes. Following Bangladesh’s move, India imposed restrictions in three phases on Bangladeshi exports through land ports.

According to sources, on 29 December, BTMA submitted a letter to the Bangladesh Trade and Tariff Commission demanding the imposition of a 20 per cent safeguard duty on imports of 100 per cent cotton yarn and blended yarn of 10–30 count from India, or alternatively, a ban on bringing yarn under the bonded warehouse system.

In response, the commission held a meeting with BTMA leaders on 5 January. The following day, BGMEA and BKMEA sent letters to the commission objecting to the move, alleging that the process was being advanced without their involvement. Subsequently, a meeting involving all parties was held at the commission’s office yesterday, Thursday.

At yesterday’s meeting, BTMA Vice President Shamim Islam and other leaders presented arguments in favour of their demands. However, BGMEA Acting President Selim Rahman and BKMEA Executive President Fazle Shamim Ehsan, along with leaders of both associations, opposed the proposal.

The meeting ended without any decision, though the Tariff Commission said it would conduct a study on the matter. The meeting was chaired by Tariff Commission Chairman (Acting) Abdul Gafur.

When contacted, BTMA Vice President Shamim Islam and BKMEA Executive President Fazle Shamim Ehsan said the Tariff Commission had requested that no comments be made to the media, as the issue is still at a preliminary stage. As a result, they declined to comment.

Leaders from both BTMA and BKMEA said that last month, senior leaders of BGMEA and BKMEA reached a consensus at the residence of a former BTMA president on jointly urging the government to impose restrictions on Indian yarn imports.

At that time, it was agreed that a safeguard duty would be sought on yarn of 10–28 count. However, BTMA ultimately demanded a safeguard duty on yarn of 10–30 count. Yarn of 29–30 count is used more extensively in the garment industry. Following this change, BGMEA and BKMEA leaders adopted an opposing stance.

Commenting on the issue, former Bangladesh Trade and Tariff Commission member Mostafa Abid Khan said a safeguard duty cannot be imposed on imports from a single country alone; if imposed, it must apply to all countries. Moreover, such duties do not apply to goods or raw materials imported under the bonded warehouse system.

“Any measure must comply with the law, otherwise it will create complications,” he said. He also noted that garment exports have been declining for the past five months, and in such a situation, steps that could hinder exports should be avoided. Therefore, any decision should be taken with careful consideration.