7 years ago

Raw materials shortage hits home textile, terry towel industry

Trade leaders want govt to continue existing minimum export rate of cotton and garment waste

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The country's terry towel, home textile and rotor spinning mills have been facing an acute shortage of raw materials -- cotton and garment waste -- which, industry insiders apprehend, will deepen if the government withdraws or reduces the existing minimum export rate.

They also fear many specialised and home textile factories may shut down if the government takes such steps, saying that it would further prolong the shortage of raw materials in the local market.

They alleged that cotton waste and garment 'jhut' (cutting waste), the main raw materials for the specialised textile mills, home textile and rotor mills, were being smuggled out and exported with false declarations to India through Benapole, Dawki, Akhaura and Tamabil land ports, creating an acute shortage of by-products in the local market.

Export of garment waste increased by 140 per cent in the first three months of the current fiscal year, according to state-run Export Promotion Bureau (EPB). Such high growth of garment waste indicated that cotton waste was exported in the name of garment jhut, industry people alleged.

The commerce ministry on October 26 sent letter seeking opinions on its proposal to review the  existing rate of cotton waste, sorted white jhut and unsorted coloured jhut to government agencies concerned and stakeholders including National Board of Revenue (NBG), Bangladesh Tariff Commission (BTC), Export Promotion Bureau (EPB), Bangladesh Textile Mills Association (BTMA), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA).

The proposals included withdrawal of tariff on cotton waste and jhut waste or fixing a minimum export rate of cotton waste at $ 0.75 per kg from existing $ 4.50 per kg with 25 per cent export duty.

The commerce ministry also proposed fixing minimum export price of sorted white jhut and unsorted coloured jhut at $300 and $100 per tonne respectively from existing $600 and $235 per tonne.

The government's move came following the request from Bangladesh Textile and Garments Waste Processors' and Exporters' Association (BTGWPEA).

The association on August 27 last in a letter to the commerce ministry called for withdrawal of the minimum export rate on cotton waste and sorted white jhut waste and unsorted coloured jhut.

"If the government revises downward or withdraws the minimum export price of cotton and jhut waste, the home textile and terry towel industry will face a blow which is already struggling to survive due to some external and internal factors including Pakistan GSP facility in EU and scarcity of gas and electricity," Hossain Mehmood, chairman of BTTLMEA, told the FE.

The industry is currently facing an acute shortage of raw materials which are allegedly being exported under misdeclaration and exporters are not getting those despite offering high prices, he noted.

The factories cannot use their full production capacity due to shortage of gas and smooth supply of electricity, Mr Mehmood said, adding that 35 to 40 per cent capacity remained unused.

"Following scarcity of raw materials, we are in dire straits to meet the export orders and maintain lead time," said Shahadat Hossain, managing director of Towel Tex Limited.

Both the leaders demanded the government should continue with the existing minimum export rate of cotton and jhut waste to protect and help flourish the local industry.

The BTTLMEA chairman, however, proposed raising the existing minimum export price of unsorted coloured jhut equal to the cotton waste to stop illegal export of the latter in the name of garment jhut/clipping. 

BTMA president Tapan Chowdhury in letter to BTC requested to take necessary measures to stop 'illegal export' of cotton waste and impose high tariff to discourage exports.

The country's rotor spinning mills produce yarn using cotton waste and similarly modern recycling mills produce another type of yarn using jhut waste from ready-made garment especially knit fabric. Those yarns are used in making terry towels, home textiles, denim and other types of clothing and exported to global markets fetching millions dollar of foreign currency.

More than 26 denim mills across the country need 200 million kilograms of yarn to produce 400 million metres of denim fabric, according to BTMA. Textile mills produce some 150 million kgs of cotton waste, it said, adding that denim mills can't use their full production capacity due to a shortage of required yarn.

The BTMA proposed issuance of certificate from a committee comprising representatives from authorities concerned including BTMA, EPB, commerce ministry in exporting cotton waste.

BKMEA former vice president Md Hatem also favoured discouraging export of cotton and knit fabric waste to protect local industry.

Some garment makers opined for minimum export rate on cotton waste while few opined no restriction on exporting garment waste/jhut. Both the groups, however, suggested that the government should scrutinise the issue before taking any measures.

Some 110 home textile and terry towel factories have so far invested $1.20 billion and created employment for some 65,000 workers, according to BTTLMEA.

The country earned $799.14 million and $44.30 million by exporting home textiles and terry towel in the last fiscal year.

When asked, Syed Nazrul Islam, president of BTGWPEA, said it is free market economy and the export-import activities should open for all.

Explaining the reasons behind their demand, he claimed that they have a huge stock of cotton and jhut waste after meeting the local demands while the international price is lower than the government-fixed minimum rate.

The stock would be much more in the coming months as China would not buy any such waste from January 2018, he said demanding withdrawal of the minimum export rate to trade the items across the globe.

Regarding the terry towel makers' allegation over illegal export of cotton waste in the name of jhut waste, he said if there are no tariff barriers, such illegal transaction might not occur.

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