Bangladesh garment makers turn to imports as local yarn costs rise

Bangladesh's garment industry, a major source of export earnings, is facing a challenge. Rising production costs for domestic yarn are making it cheaper for clothing manufacturers to import yarn instead of buying locally. This trend threatens the growth of the country's textile sector.

Data from Bangladesh Bank shows a double-digit increase in yarn imports during the first nine months of the fiscal year. This comes despite a decline in imports of other raw materials like cotton and fiber. The price difference is stark: exporters say locally produced yarn is simply too expensive.

Textile mill owners blame high utility costs and gas shortages for their predicament. These factors limit production capacity and drive up yarn prices. Meanwhile, garment makers have access to cheaper yarn from countries like India, Pakistan, and China, thanks to bonded warehouse facilities.

The situation is concerning for both industries. Garment manufacturers need a reliable domestic supply chain to ensure quick turnaround times and remain competitive. However, they can't ignore significant cost savings offered by imported yarn.

Industry leaders are calling for government intervention. They want policies that level the playing field with foreign competitors, who benefit from government support in areas like labor costs and energy. Additionally, ensuring a stable gas supply and potentially lowering interest rates could help domestic mills become more price competitive.

The future of Bangladesh's textile sector hinges on finding a solution. If yarn imports continue to rise, many domestic mills could be forced to close, jeopardizing jobs and a significant portion of the country's export earnings.