Spinning sector in Bangladesh

Bangladesh spinning

The RMG industry in Bangladesh began as a tiny non-traditional export sector in the late 1970s and has since grown to become the country's most revenue-generating sector, accounting for 81 percent (USD 24.49 billion in FY 13-14) of total export. Garments exports were USD 14.44 billion from July 14 to February 15, up 1.91 percent from the same period previous year.The industrial supply chain has been considerably affected by recent political instability, and foreign customers are becoming increasingly hesitant to place fresh orders. Competitors like as Pakistan and Vietnam are gaining ground on the international stage thanks to access to favorable trade deals. Bangladesh has a competitive advantage because to its low labor costs, but it still has infrastructural issues and inconsistent utility supplies.

 Sector of Spinning 

The spinning sub-sector is still critical to the RMG value chain, as it helps to stabilize the supply chain while lowering costs. Cotton yarn, polyester yarn, synthetic yarn, woolen yarn, and blended yarn made of cotton and polyester of various counts are the products of the spinning sub-sector (mostly up to 80 count). Weaving sub-sectors such as specialty textiles, handlooms, and knitting and hosiery employ yarns. With the phasing out of MFA in 2005, the growth in clothing exports has resulted in the establishment of 350 spinning mills, as well as an increase in investment since 2001.Spinning mills in the private sector can currently fulfill roughly 100 percent of domestic yarn demand and 95 percent of yarn demand for export-oriented knit fabric factories. Furthermore, private sector spinning mills meet about 85% of cotton yarn demand and 50% of synthetic and mixed yarn need of export-oriented fabric manufacturing mills. Bangladesh Textile Mills Association (Bangladesh Textile Mills Association) The remaining imports are sourced from China Despite having thread and fabric manufacturing capabilities, Bangladesh imports almost all raw materials, primarily cotton and other man-made fibers such as polyester, Viscose, and Staple Fiber. Every year, the government spends a significant amount of foreign money on importing raw materials and accessories to fuel the RMG industry. In the fiscal year 2012-13, the government spent USD 5.27 billion on cotton, cotton yarn and textiles, and knit fabrics alone. Cotton is the primary imported raw material, therefore price fluctuations on the international market have a direct influence on the spinning industry. Cotton prices have been declining since the middle of 2011, but have begun to stabilize since the middle of 2013. The prediction for the 2014/15 world cotton crop was revised slightly higher (+206,000 bales to 119.4 million) in the latest United States Department of Agriculture (USDA) report, but the forecast for world cotton mill-use was revised down (- 985,000 bales to 111.3 million). Higher production and lower demand projections resulted in a 1.2 million bale rise in worldwide ending inventories (to 109.8 million bales). Prices are projected to stay constant or drop in 2015, owing to growing output and declining demand. On continued export demand for value-added goods, notably by the RMG industry, Bangladesh is expected to boost raw cotton imports by 7.6% to 4.2 million bales in 2014-15. India (35 percent market share) and Uzbekistan are the top raw cotton exporters (25 percent market share).

Policy Initiatives

 Bangladesh has no import duties for polyester, viscose, acrylic, synthetic and modacrylic staple fiber. Textile chemical dyes are subject to a 5% tariff. Duty drawback incentives allow export-oriented RMG companies to import yarn and fabric, reimbursing all customs charges paid on imported yarn and textiles (but not taxes such as the VAT and Advanced Income tax). All textile raw materials are imported. Preferential Trade Agreement (PTA) Effects Even though the items are manufactured from imported textiles, exporters benefit from the GSP decision, which was adopted a few years ago. Previously, exporters benefited from the use of solely local textiles. With the implementation of the current one-stage rules of origin, the country's 100% clothing exports to the EU, Norway, Switzerland, and Turkey are now eligible for GSP benefits, whereas before just 42.72 percent of woven-wear textiles were eligible. Bangladesh was able to grow up and spend substantially (Euro 4.00 billion) in the backwark thanks to the previous GSP Policy, which needed a two-stage transition for apparel export. 

Remarks at the End 

The performance of the spinning sub-sector is heavily reliant on the overall success of the RMG industry. Spinners must rely on the price stability of cotton and other imported raw materials because their raw materials are primarily imported. In 2011, several spinners indulged in speculating, which resulted in huge losses. However, if adequate infrastructure support is available, the spinning industry may contribute value by giving considerable cost benefits to the RMG sector through efficiency.

Also read:Bangladesh spinning, Dyeing sector in Bangladesh(Yarn)

*Spinning  sector in Bangladesh