Bangladeshi textile manufacturers need protection from rivals in India, with whom they cannot compete on price due to the relative weakness of India’s currency, a senior business leader said on Saturday.
Bangladeshi ready-made garment exporters who used to buy raw materials from local manufacturers now prefer to import them from India for cheaper prices, said A Matin Chowdhury, managing director of Rahim Textile Mills Ltd, a major yarn manufacturer.
“Our ready-made garment exporters are now preferring to import yarns from India, where a much devalued currency favours the Indian exporters,” said Matin, a former president of the Bangladesh Textile Mills’ Association.
He told reporters that manufacturers sought government safeguards as Indian spinners were shipping yarns to the Bangladeshi apparel makers at dumping prices. He said the present five percent cash incentives for using local yarns, provided by a government fund, should be raised to 15 percent. He called for exporters, as a temporary measure, to receive a bonus of six percent of the value of exports, to be paid out of a research and development fund.
More than 100,000 tonnes of yarns worth about $290 million were stockpiled at spinning units, which had been forced to cut production by 30 percent on average.
Matin said that since Jan 1, 2008, the Indian rupee had been devaluated by 24 percent against the US dollar and the rupee of Pakistan, another major yarn exporting country, had been devalued by 26 percent. The Bangladeshi currency, by contrast, experienced only a 0.05 percent devaluation, he added. He said abundant availability of local cheap cotton allowed Indian exporters to reduce yarn prices instantly while it took around five months for Bangladeshi spinners to pass cotton price cuts on to yarn due to their reliance on imported cotton. He warned that if the government did not launch a support package immediately, most of the country’s spinning units would soon close.
The country has 341 spinning mills with an annual production capacity of 1.6 billion kg of yarn and total investment in the sector is 4.0 billion euros ($5.30 billion), according to BTMA statistics.
He said Turkey, a leading knitwear exporter, had launched safeguards for spinners by imposing a roughly 20 percent customs duty on imported yarn.
India had announced a stimulus package for the sector and was providing research and development funds to manufacturers, he said.
According to Bangladesh Bank data, letters of credit worth $205.39 million were settled in July-October of 2008 compared to $142.70 million in the same period a year ago to import cotton yarn.
Matin said Bangladeshi companies could sell yarn at $2.55 per kg, while the same Indian yarn sold at $2.15 per kg. reuters
Bangladeshi ready-made garment exporters who used to buy raw materials from local manufacturers now prefer to import them from India for cheaper prices, said A Matin Chowdhury, managing director of Rahim Textile Mills Ltd, a major yarn manufacturer.
“Our ready-made garment exporters are now preferring to import yarns from India, where a much devalued currency favours the Indian exporters,” said Matin, a former president of the Bangladesh Textile Mills’ Association.
He told reporters that manufacturers sought government safeguards as Indian spinners were shipping yarns to the Bangladeshi apparel makers at dumping prices. He said the present five percent cash incentives for using local yarns, provided by a government fund, should be raised to 15 percent. He called for exporters, as a temporary measure, to receive a bonus of six percent of the value of exports, to be paid out of a research and development fund.
More than 100,000 tonnes of yarns worth about $290 million were stockpiled at spinning units, which had been forced to cut production by 30 percent on average.
Matin said that since Jan 1, 2008, the Indian rupee had been devaluated by 24 percent against the US dollar and the rupee of Pakistan, another major yarn exporting country, had been devalued by 26 percent. The Bangladeshi currency, by contrast, experienced only a 0.05 percent devaluation, he added. He said abundant availability of local cheap cotton allowed Indian exporters to reduce yarn prices instantly while it took around five months for Bangladeshi spinners to pass cotton price cuts on to yarn due to their reliance on imported cotton. He warned that if the government did not launch a support package immediately, most of the country’s spinning units would soon close.
The country has 341 spinning mills with an annual production capacity of 1.6 billion kg of yarn and total investment in the sector is 4.0 billion euros ($5.30 billion), according to BTMA statistics.
He said Turkey, a leading knitwear exporter, had launched safeguards for spinners by imposing a roughly 20 percent customs duty on imported yarn.
India had announced a stimulus package for the sector and was providing research and development funds to manufacturers, he said.
According to Bangladesh Bank data, letters of credit worth $205.39 million were settled in July-October of 2008 compared to $142.70 million in the same period a year ago to import cotton yarn.
Matin said Bangladeshi companies could sell yarn at $2.55 per kg, while the same Indian yarn sold at $2.15 per kg. reuters
