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Yarn and fabric dumping pushing local millers to brink of the cliff

India, China, and Pakistan are dumping yarn and fabric to Bangladesh that is impeding local millers and pushing them to operate business at a loss

Bangladesh has many achievements in the international trade market, still, the huge negative trade balance is a matter of great worry. Bangladesh is having an acute problem of dumping a huge quantity of raw materials for the textile industry by mainly India along with China and Pakistan.

Yarn fabric dumping in BD
Figure: Bangladeshi backward linkage factories are running their business at loss because of yarn and fabric dumping to Bangladesh from India, Pakistan, and China.

China is providing direct cash returns to the exporters of about 15 to 20% on their export of fabric to countries like Bangladesh. The Chinese government also provide direct support for the fabric manufacturers and traders for promoting their products by participating in different international exhibitions. This ultimately creates countless sufferings for the Bangladeshi local millers, especially for backward linkage millers.

Now the moment, Bangladeshi backward linkage factories (spinning, weaving, and knitting) are running their business at loss because of yarn and fabric dumping to Bangladesh from India, Pakistan, and China. Mainly, India is dumping yarn where China and Pakistan are dumping fabrics to Bangladesh.

According to WTO, if a company exports a product at a price lower than the price it normally charges in its own home market, it is said to be dumping the product.

We cannot completely stop the illegal import of yarns as it is an era of the free market. But we can make policy and impose a tax on imported yarns like India. And we must ensure taxation and impose a duty in all seaports, airports, and border posts.

Engr Md. Mozaffar Hossain, MP

Let’s see how Bangladeshi millers are losing business-

  1. For the last three months, Bangladesh spinning and fabric mills are facing severe unfair competition from India, China, and These countries are dumping yarn and fabric to Bangladesh at an unbelievably low price with which local companies are not being able to compete with.
  2. The dumping campaigns of these three countries came in such a time when Bangladesh has enforced new wage policy pushing the worker’s salary up to 60%.
  3. Many Bangladeshi spinning, weaving and knitting millers have expressed their depression to Textile Today saying that if such trend continues for upcoming months, they have to shut down their factories.
  4. There have been cases where India and China are quoting 30% lower prices than rational minimum production costs. India is dumping yarn and China fabric mostly.
  5. Usually, every year during cotton harvest Indian spinning mills dumps yarn to earn cash to buy cotton at a low At that time spinning mills of Bangladesh suffer cash flow shortage and can’t buy cotton and later on, they need to buy cotton at a higher price. This is a double-edged sword cutting all the competitive edges of Bangladesh spinning industries.
  6. Due to the low yarn and fabric prices, apparently the apparel makers may get an advantage but they are also going to fall within a great trap. While buyers are looking for low price sources now, they are making coatings with these low-price Chinese fabric and Indian yarn, later on, while the apparel makers won’t be able to increase it easily. This will create a strong dependency on imported fabrics and yarns increasing lead time pressure and hurting the supply chain advantage.

Our competitor countries like China, India, and Pakistan have their own policy and law to protect their local millers from dumping issue. It is high time for Bangladesh to take anti-dumping measures to save its spinning, knitting, weaving and processing industries. By policy, Bangladesh can make the process of importing of yarn and fabric very strict.

Engr Md. Mozaffar Hossain, MP told Textile Today, “We cannot completely stop the illegal import of yarns as it is an era of the free market. But we can make policy and impose a tax on imported yarns like India. And we must ensure taxation and impose a duty in all seaports, airports, and border posts.”

Also Read: To sustain in the market, textile millers operating business at loss

To be a sustainable cotton importer we have to reduce our dependency on one country. In this case, African countries can be a major source of cotton for raw materials in Bangladesh’s spinning industry.

“Currently, Bangladesh sources around 20.88% of its total cotton demand from African countries. We are bargaining with our government, to give us policy support to import more cotton from Africa,” Mohammad Ali Khokon, President of BTMA said Textile Today.

“The cotton that we import from India and China is not even of good quality,” Khokon stated.

Read More: Our government should impose anti-dumping law to protect our local spinning industry…

So that the country should take measures to keep cotton import easy and smooth. The country can go for major investments in African cotton-producing countries to keep its cotton supply smooth. This is to mention that Bangladesh is the highest important destination in the world for cotton exporting countries.

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