Govt moves to curb yarn imports, RMG exporters unhappy

The commerce ministry has recommended that the revenue board end the duty-free import of certain types of yarn under the bonded warehouse facility. 

Local spinners have welcomed the recommendation, but local apparel manufacturers say this could push up production costs and undermine the country’s export competitiveness.

In a recent letter to the National Board of Revenue (NBR), the ministry recommended withdrawing the bonded facility for importing yarn of 10 to 30 count - a medium-to-coarse thickness range widely used in knitwear manufacturing. A higher count indicates less thickness.

The ministry cited mounting pressure on local spinning mills from cheaper imports, particularly from India.

Readymade garment exporters say the proposal risks unsettling the country’s largest export sector at a time of global uncertainty and intense price competition.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) voiced their concerns regarding the move and announced to hold a press conference on the issue today.

BGMEA Director Faisal Samad said the suspension of duty-free imports would force garment manufacturers to rely more heavily on local yarn suppliers, where prices are already rising.

“The garment sector will be severely affected as we will have to buy yarn at higher prices from a monopolised local market,” he said, adding that BGMEA members had raised the issue at an emergency meeting.

He declined to comment further ahead of the press conference, but said exporters were deeply concerned about the government’s decision to restrict imports of “widely consumed” yarn.

BKMEA Executive President Fazlee Shamim Ehsan said imported yarn accounts for nearly 30 percent of the country’s total demand - roughly $1.5 billion worth - with most of it sourced from India. The remaining demand is met by domestic spinners.

He said local mills had already started quoting prices $0.25-0.3 (Tk 30-36) per kilogramme higher following the proposed restriction.

“It is not right to harm the export-oriented garment industry to salvage the spinning sector,” he said, arguing that targeted incentives of four to five percent could have been offered to primary textile producers instead.

The push for restricting imports follows sustained lobbying by the Bangladesh Textile Mills Association (BTMA), which has warned that some mills in the primary textile sector, which have investments of about $25 billion, are facing the risk of closure due to the import of cheap yarn from India.

In late December, BTMA urged the government to either suspend the bonded warehouse benefit or impose a 20 percent tariff on imports of the popular yarn counts.

According to BTMA sources, Bangladesh uses 400 crore kilogrammes of yarn in a year, with some 46 percent coming from India.

According to BTMA, Indian traders have been selling 30-count yarn in Bangladesh at $2.50 to $2.60 per kilogramme, even though the same yarn sells for $2.90 to $2.93 per kilogramme in India.

The association said such pricing reflects heavy incentives and has left local spinners struggling, with unsold yarn stocks reportedly reaching Tk 12,000 crore by the end of December.

The commerce ministry echoed these concerns in its letter to the NBR, noting that yarn imports surged sharply in recent years.

Import volumes rose by more than 68 percent in fiscal year 2023-24 (FY24) compared to the previous year, while values increased by over 46 percent. In FY25, volumes grew by another 18.4 percent and values by 26.3 percent.

The ministry said at least 50 spinning mills have already shut down and warned of further losses if the current import trend continues.

It also cautioned that growing dependence on imported yarn could reduce the garment sector’s competitiveness due to lengthened lead times, reduce local value addition, and put pressure on foreign currency reserves.

Exporters, however, argue that limiting access to competitively priced yarn could weaken Bangladesh’s position in global apparel markets, especially as buyers remain highly price-sensitive.

Showkat Aziz Russell, president of BTMA, said the issue must also be seen in the context of Bangladesh’s graduation from least developed country (LDC) status.

He said exporters would need to comply with “two-stage transformation” rules – using locally spun yarn instead of imported cotton – to qualify for preferential market access in destinations such as the European Union (EU), the United Kingdom and Japan after graduation.

He also noted that securing GSP Plus benefits from the EU would require at least 40 percent local value addition, compared to current levels of around 35 percent in spinning, knitting at 20 percent and weaving at 25 percent.

The local spinners mainly produce the 30-count yarn to serve the garment exporters.

While local mills can supply about 90 percent of yarn demand for knitwear and 45 percent for woven garments, the rest still depends on imports from countries including India, China and Pakistan.

Spinners said in fiscal year 2025-26, $2.0 billion worth of yarn was imported from India, with local mills using 1,600 tonnes daily.

Bangladesh is the largest destination for Indian yarn exports, receiving 44 percent of the total, while Cambodia ranks second at 21 percent.

Earlier, in April last year, Bangladesh banned yarn imports from India through land ports, though sea-route imports remained unaffected. Millers have said they do not seek a complete ban, but rather measures to curb what they describe as dumping.

Contacted, Mohammad Naziur Rahman Miah, first secretary of customs (export and bond), said the NBR had received the commerce ministry’s letter. “The issue is under consideration. No decision has been made yet.”