WITHDRAWAL OF INCENTIVE: Textile millers left in lurch

Al Amin :
Textile mills, which flourished in late 1990s cushioning on 4 per cent subsidy, now fear big backlashes as the facility is weaned off.

To survive in the competition, the entrepreneurs of the local textile and spinning industry have sought intervention from the Prime Minister to restore a cash incentive which was withdrawn last week.

They said overall readymade garment and textile industries are struggling hard to survive due to local and international challenges. Under this situation, the existing cash incentive was not sufficient for the industry.

So, the decision of withdrawal of the cash incentive will throw the sector into a deep crisis and the imports of all kinds of fabrics by taking a duty-free facility will increase significantly, the entrepreneurs said.

They further said small and medium entrepreneurs of the knitwear and textile industry will be forced to shut down their factories being unable to survive against the headwind.

According to the Bangladesh Textile Mills Association (BTMA), the local entrepreneurs invested worth around Tk 2 lakh crore in over 500 spinning mills across the country and they supply over 85 per cent yarns of total demand to the local knitwear manufacturers.

In a letter sent to the prime minister, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President AKM Salim Osman said, “We have no idea why the authorities made such a decision without consulting the stakeholders and taking the situation of the industry into account.”

“Without any prior notice, this sudden decision of incentive withdrawals from 56 per cent of apparel items will be a dangerous move for the industry.

Consequently, many factories may face challenges in survival,” he added.

He mentioned that approximately 80 per cent of knitwear export products will be impacted by this decision, significantly affecting Bangladesh’s apparel export strength.

The BKMEA president showed his concern about the circular’s lack of direction on providing alternative incentives after LDC graduation, a practice followed by most middle-income countries.

Additionally, the circular removed three growing markets (Australia, Japan and India), making up 8 per cent of apparel exports and this trio showed a significant 43.56 per cent growth in the last fiscal year.

The industry has been grappling with order shortages for the past eight
months, while entrepreneurs find themselves burdened with utility payments that have more than doubled in recent days, he pointed at its plight.

Mentioning that gas prices surged by 179 per cent last year, and the new wage structure has been in effect since December 2023, the BKMEA president apprehended that the current investment in the sector worth around Tk 2 lakh crore might be threatened.

He also mentioned, “Our competing peers including Vietnam, India, Cambodia etc provide various incentives to the readymade garment and textile industry through alternative ways to make the exporting sector sustainable.”

Contrary to this, the sudden decision on incentive has been taken without any consultation with the stakeholders and considering the current situation of the sector, he added.

Under the circumstances, we demand restoration of the incentive till June this year as per the prior announcement and for chalking up the next course of action by consulting with stakeholders, Osman said.

Spinning miller sources said over 20,000 tonnes of yarn orders have been shifted immediately after the circular.