The import of yarn saw a significant increase in 2024, leading to uneven competition for local spinners, primarily due to the higher cost of production driven by the ongoing gas crisis in the country, industry insiders have said.
Bangladesh imported 680.43 million kilograms of cotton yarn under a bonded facility in 2024, which represents a rise of over 39 per cent compared to the 488.96 million kilograms imported in 2023, according to data compiled by the Bangladesh Textile Mills Association (BTMA).
The country spent approximately $2.27 billion on cotton yarn imports in 2024, compared to $1.75 billion in 2023, the data shows.
In addition, imports of woven and knitted fabrics also saw significant increases, rising by 20 per cent and 38.35 per cent respectively.
Bangladesh imported 588.85 million kilograms of woven fabrics in 2024, up from 490.63 million kilograms in 2023.
The import of knitted fabrics reached 439.07 million kilograms in 2024, compared to 317.36 million kilograms the previous year.
Due to higher production costs, the ongoing gas crisis, and a reduction in incentives, domestic textile millers, particularly spinners, are facing ‘uneven’ competition with foreign counterparts and are losing yarn orders even from local ready-made garment (RMG) exporters, industry insiders have stated.
For the past year, RMG exporters have preferred sourcing raw materials from abroad, stifling further growth of the local spinning sector, they said.
Yarn is essential for producing fabrics and subsequently ready-made garments, and garment exporters typically source raw materials such as yarn and fabrics from the domestic market when under pressure from work orders and the need to shorten lead times, despite a price difference, they explained.
Garment exporters have said that locally produced yarn is more expensive than imported yarn, while textile millers argue that high utility costs and inconsistent gas supply have driven up production costs, resulting in higher prices for locally made yarn.
Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), explained that yarn imports have risen, particularly from India, due to the higher price of locally produced yarn.
He said that the price difference between local and imported combed yarn has grown to an average of 40 cents per kilogram, adding that those with adequate storage facilities and the ability to manage longer lead times are more inclined to opt for imported yarn.
Furthermore, he pointed out that the government has reduced the incentives that once encouraged local garment exporters to source yarn from the domestic market.
Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the local spinners are unable to supply finer count yarn needed for producing value-added and blended garments, which combine cotton with other man-made fibres.
He explained that although some mills produce man-made fibre (MMF)-based yarn, the prices are high. The price difference between local and imported yarn, which was previously between 20 and 30 cents per kilogram, has now increased.
He also claimed that local millers are unwilling to supply yarn counts higher than 40 or 42, prompting exporters to turn to imports.
Khorshed Alam, chairman of Little Star Spinning Mills Ltd, accused India of dumping yarn in Bangladesh at low prices, as they have access to their own cotton and storage facilities near the Benapole port.
He said that Indian importers are able to sell yarn at a ‘dumping price’ due to the policy support their government provides, including incentives for labour costs and electricity.
He explained that as a result, Indian producers can sell their yarn at production cost levels, while Bangladesh faces challenges due to a lack of domestic cotton, inadequate gas supply, and rising bank interest rates.
Indian yarn importers also benefit from faster delivery via the Benapole port, he added.
Khorshed also said that the prices of locally produced yarn have risen due to high utility costs and gas shortages.
On the one hand, costs have increased, while on the other, mills cannot operate at full production capacity due to the poor gas supply, he said.
As a result, locally produced yarn is losing its competitiveness, with garment exporters sourcing yarn from abroad through bonded warehouse facilities, as imported yarn is cheaper than locally made yarn.
He also alleged that some traders were using the licences of exporters to import higher-count yarn, such as 80-count yarn, under the guise of 30-count yarn.
According to industry sources, local textile mills meet around 80 per cent of the demand for the knitwear subsector and 35-40 per cent for the woven subsector.
Bangladesh earned $38.48 billion from RMG exports in 2024, with knitwear accounting for $20.52 billion and woven garments $17.95 billion, according to BGMEA data.
In 2023, the country earned $35.88 billion from garment exports.