Local manufacturers and exporters of ceramic products are feeling the pinch after the US suspended a trade benefit for Bangladesh, industry people said.

The falling exchange rate, the poor pressure and supply of gas, and no incentives for export of the products are also eroding the sector's competitiveness, they added.

"The cancellation of the GSP (generalised system of preferences) to the US market had a direct impact on us," said Humayun Kabir, chief executive of Shinepukur Ceramics that accounts for 40 percent of Bangladesh's exports of ceramic products.

Export Promotion Bureau data shows Bangladesh exported ceramic products worth $47.58 million in fiscal 2013-14. Exports fell to less than $43 million in the following year and $37.69 million in 2015-16.

Bangladesh's ceramics export in 2015-16 was less than that of nine years ago, although 40 out of the 60 ceramic factories in the country were set up in the last 10 years.

Exports also fell short of targets in the first two months of the current fiscal year.

The GSP is a trade scheme under which the US allows import of more than 5,000 goods from 122 least developed and developing countries with lower or zero-duty benefit.

After the Tazreen Fashions fire and Rana Plaza building collapse, the US suspended the GSP for Bangladesh in June 2013, citing serious shortcomings in labour rights and workplace safety.

"After the cancellation of the GSP, we have to pay 30 percent in duties on export to the US," said Irfan Uddin Rifat, general secretary of Bangladesh Ceramic Manufacturers and Exporters Association and chief executive of Farr Ceramics.

He said a jump from zero-duty to 30 percent is too high for the local exporters. Ceramics is a relatively new industry in Bangladesh. It is gas-

based, labour intensive and skills-oriented. Value addition in ceramics stands at nearly 65 percent. Clay, which is a major raw material for ceramics, is being imported by the local industries.

Some of the ceramic factories in the country rely on exports for their business. Factories like Shinepukur, Farr, Monno, Paragon, and Standard produce tiles, tableware and sanitary ware. But it is tableware that accounts for 95 percent of Bangladesh's ceramics export.

"The US is a big market for ceramics tableware. The cancellation of the GSP is the main reason for falling exports," said MA Jabbar, managing director of DBL Ceramics that will start commercial production in December.

A falling exchange rate is also making the local exporters noncompetitive, he added.

Industry players also criticised the government's discrimination in giving incentives to exports.

"Incentives are given to garments and some other sectors, but not ceramics. Also, garment makers can import raw materials with a zero-duty benefit, but we have to pay duties and advance income tax for import of raw materials," said Kabir of Shinepukur Ceramics.

The government has given garment exporters a 2 percent currency value adjustment benefit for exports to the European market, he added. "The government policy should be for all exporters, not sector-specific. ”

These challenges have forced many manufacturers to concentrate on the domestic market for their business, he said. "It is tough for us to compete with China in the international market as it has raw materials for ceramics," said Mamunur Rashid, managing director of Monalisa Ceramics.

He said local consumption, even in rural areas, is rising fast with an increase in the purchasing power of the growing middleclass. An estimate by Bangladesh Ceramic Manufacturers and Exporters Association shows despite tremendous growth of the local industry, the country still imports products to meet 10-20 percent of its demand.