India’s yarn imports see little impact despite restrictions

Although the Bangladesh government halted yarn imports through land ports from India in mid-April this year, yarn imports from India have decreased only slightly despite the restrictions.

This is because, after imports through land ports were stopped, yarn began to come in through sea ports.

According to data from the National Board of Revenue (NBR), yarn imports from India decreased by 230,000 kilograms in the three months after the suspension compared to the three months before.

Earlier, an average of 50 million kilograms of yarn came in per month from that country. After the restrictions, in May and June, the average import was 40 million kilograms. In July, yarn imports again exceeded 50 million kilograms.

Several textile mill owners said that more yarn than declared would enter the country due to a lack of monitoring at land ports.

Even 80-count yarn would be smuggled in along with consignments of 30-count yarn (the fineness or coarseness of yarn is measured in counts).

Such yarn imported under bond facilities would be sold cheaply in the local market by unscrupulous importers. This pushed domestic yarn mills into huge losses.

After the restrictions, false declarations for yarn imports from India stopped. As a result, demand for domestic yarn increased. To completely eliminate irregularities, they believe strict enforcement of yarn count testing at Chattogram port is necessary.

It has been learned that at the end of March this year, Bangladesh’s commerce ministry decided to stop yarn imports through land ports.

On 15 April, the NBR issued a notification cancelling facilities for yarn imports through the land ports of Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari.

Complaints had long been raised by Bangladesh’s textile sector entrepreneurs that expensive yarn was being imported from India under false declarations and at lower prices. Following those complaints, the decision was made to suspend yarn imports through land ports.

Just before Bangladesh stopped yarn imports through land ports, on 9 April, India withdrew the facility for Bangladesh to use Indian ports for transhipment to third countries.

On 17 May and 27 June, India imposed restrictions in two phases on exports of garments, food products, jute goods, cotton waste, plastic products, and wooden furniture. On 11 August, India imposed further restrictions on a number of jute products.

On condition of anonymity, a business leader told Prothom Alo that after Bangladesh imposed restrictions on yarn imports, the Indian government withdrew the facility of using its ports for transhipment of Bangladeshi goods to third countries.

Although Bangladesh ranks second in the world in ready-made garment exports and has more than 500 spinning mills, a huge amount of yarn still has to be imported every year. Nearly half of this comes from India. The second-highest quantity comes from China.

According to NBR data, 720 million kilograms of yarn were imported in the first seven months of this year (January–July). This cost 2.2 billion US dollars. Of this, 47 per cent or 340 million kilograms came from India, while 38 per cent or 276.1 million kilograms came from China.

In January, February, and March this year, yarn imports from India were 55.1 million kilograms, 52.1 million, and 51.3 million kilograms respectively. When restrictions were imposed in April, imports dropped to 45.7 million kilograms. In the following two months, May and June, imports were 41.5 million and 40.5 million kilograms respectively. In July, imports rose again to 53.4 million kilograms.

It has been learned that yarn from India comes mainly from Karnataka, Tamil Nadu, and Gujarat. Earlier, yarn would be stockpiled around the Benapole border. Once import orders were placed, Indian exporters would ship the goods within a couple of days, allowing garment factories in Bangladesh to receive yarn within a week. Currently, importing through sea ports takes 20–25 days. However, transporting yarn by ship is cheaper.

When asked, Khorshed Alam, director of Bangladesh Textile Mills Association (BTMA), said, “We do not want yarn imports from India to stop. We only wanted imports of higher-count yarn under false declarations to stop. After imports through land ports were stopped, higher-count Indian yarn is no longer available in the market. As a result, sales of local spinning mills have increased.”

When asked why yarn imports from India have not decreased, he said Indian exporters receive cash incentives for yarn exports, allowing them to supply at a lower price than Bangladesh.

According to BTMA, there are 519 spinning mills in Bangladesh. These mills supply 85–90 per cent of yarn for knitwear and about 40 per cent for woven fabric. However, several rounds of gas and electricity price hikes have increased production costs for yarn. Local yarn mills have also long suffered due to gas shortages.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Mohammad Hatem said, “Since yarn imports through land ports were stopped, it now takes longer to bring in yarn from India. This is reducing our competitiveness. We need to get to the root of the problem. The main reason yarn is coming from India is that their price is 20–30 cents per kilogram lower than in Bangladesh. Last year, when the Bangladesh government reduced cash incentives for exports made with local yarn, this gap widened further.”

Giving an example, Hatem said, “For one of my company’s orders, the yarn I imported from India cost 2 dollars 12 cents, whereas the same yarn from Bangladesh would cost 2 dollars 65 cents. Therefore, if we want to strengthen the textile sector, we cannot make decisions ignoring the garment industry.”

He claimed that the decision to suspend yarn imports through land ports was taken only after discussions with textile mill owners.