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Textile millers hit rough patch

Sector leaders seek policy support from the government

Star Business Report
Textile millers are passing through hard times due to global, regional and domestic troubles, sector leaders said yesterday.
A rise in import of yarn and fabric, fluctuations in prices of raw materials, subsidy by Indian government to its mills, energy crisis, and high prices of land coupled with inadequate policy support slowed the $3.5 billion sector.
Hurt by these factors, no new textile mill was set up in the country during the last three years, said Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA).
On top of these, a recent hike in banks' interest rates on lending to 17 percent has added troubles to the textile sector that employs around 10 lakh people.
“Many textile factories still cannot go into production due to a lack of gas and power connections although those were set up a few years ago,” said Alamin at a discussion on the current situation of the textile sector in Bangladesh at The Daily Star office yesterday.
The Daily Star Editor and Publisher Mahfuz Anam delivered a welcome address.
"We want a healthy and prosperous textile sector," he said, adding that The Daily Star will
focus on the achievements, problems, prospects and challenges of every sector gradually in a bid to support entrepreneurs to take the economy forward.
Sector leaders shared their problems at a time when they aim to become the second biggest
supplier of yarn and fabrics after China, outpacing their Indian counterparts.
At present, textile mills meet 90 percent requirement of knitwear and 40 percent of woven garment factories and thus allow the country to retain higher amount of
foreign currencies from exports.
To accelerate the growth of the sector, they wanted a continuous policy support by the government, reduction in bank interest rates and improvement in infrastructure. "If we want to reach the expected goal, we need the government support as India is in an advantageous position over us because it grows cotton locally whereas we have to import it," said Alamin.
“We need policy support to be more competitive.”
He also said the government should respond quickly to the changing scenario of global trades and formulate newpolicies for the development of the sector.
Noting the current problems, he said the relaxation of the Generalised System of Preferences (GSP) by the European Union has directly affected many mills.
The EU gives 12.50 percent duty benefit to the garment exporters of the least developed countries (LDCs) even if the apparel is made from imported fabrics. Previously, the EU used to give duty benefit only to those exporters who made the garments with local fabrics, he said.
A massive volatility in the prices of cotton has also hurt the local textile mills, he added.
Alamin said many textile mills that had imported cotton at high prices earlier, incurred losses due to a sharp fall in the prices since April last year.
"It has seriously affected the weaving mills," said the president of the BTMA, a body of 1,339 members with half of the mills making fabric for woven factories.
To help the sector cope with the present problems, the BTMA president demanded the government discourage imports by tagging a condition that 50 percent of the requirement of yarn of a factory should be met from domestic market.
"We also urge the government to reschedule our bankloans," hesaid.
The BTMA president said India is giving a number of incentives to boost its textile sector. In India, benefits begin from cotton production and continue till exports of yarn and fabrics, he added.
A Matin Chowdhury, managing director of Malek Spinning Mills, said: “If the textile millers get cotton and yarn in delay, they will not be able to supply the fabrics to the garment makers timely. As a result, exports will be hampered.”
He said incentives by the successive governments contributed to the growth of the textiles mills in the past three decades.
Director AKM Azizur Rahman Khan, Vice-presidents MA Zaher and Ahmed Ali and former vice-president M Jamaluddin also spoke.