Textile millers' stacks of unsold yarns and fabrics are getting higher due to massive leakage of imported bonded goods to the local market and invasion of cheap Chinese and Indian substitutes, said a top BTMA official yesterday.
Since the turn of the year, the local market has become flooded with cheap Chinese and Indian yarns, according to Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA).
For instance, the widely consumed 30-carded cotton made yarn can now be bought for $2.90 to $2.95 a kg, down from $3.25 to $3.30 per kg in November last year.
This has left the textile millers with 30 percent unsold inventory worth about Tk 15,000 crore.
Subsequently, the BTMA president met with Salman F Rahman, prime minister's adviser on private industry and investment, on Sunday to request the government to take measures to stop the illegal imports.
“A section of unscrupulous traders have been importing yarn illegally in connivance with some government officials,” Khokon said in a statement after the meeting with Rahman at his residence.
For example, they open letters of credit for importing one truck of yarn through Benapole but they end up importing more due to lack of proper monitoring at the land port.
If the illegal imports are not checked, the local factories' inventory will soar and they will feel discouraged to continue production, he said.
The local spinners, which can meet 85 percent of the demand from the knitwear sector and 35 percent from the woven sector, have already slashed production by 40 percent because of the recent development.
Another problem afflicting the textile millers is that a section of unscrupulous traders have been selling goods imported under bonded facility.
The government allowed import of duty-free goods under bonded facility only for export-oriented garment factories.
“The importers are not interested in commercial import as they would have to pay nearly 37 percent duty.”
If the two issues are not addressed, the primary textile sector, which has Tk 70,000 crore tied up, will regress, he added.