Calls for anti-dumping duty on Indian yarn grow louder

The country's primary textile millers have once again called upon the government to impose anti-dumping duty on cheap Indian yarn to save the $8 billion domestic textile industry.

Thanks to the global coronavirus pandemic, hundreds of mills in India are sitting on unsold yarn, which they are diverting to Bangladesh on the cheap and many local garment makers are lapping them up.

For instance, the local millers are selling the widely-consumed 30-carded yarn is selling at $2.80 to $2.90 a kilogram, whereas the same quality yarn can be managed at $2.60 to $2.70 per kg from India, according to the Bangladesh Textile Mills Association (BTMA).

Besides, the Indian yarn is highly subsidised as the government provides incentives for cotton purchase and production of yarn at the mill level, according to BTMA Secretary Monsoor Ahmed

As a result, yarn worth $1.4 billion have remained unsold at the factory level in Bangladesh over the last two months, he told The Daily Star yesterday.

Subsequently, the BTMA recently wrote to Finance Minister AHM Mustafa Kamal, Commerce Minister Tipu Munshi and Textiles and Jute Minister Golam Dastagir Gazi requesting measures to stop the invasion of cheap Indian yarn.

In the letter, the association also called for increasing the cash incentive for garment exporters by 6 percentage points to 10 per cent if local yarn and fabrics are used.

The local millers churn out $12 billion worth of yarn a year and can meet 85 per cent of the demand for raw materials by the knitwear sector and 35 per cent by the woven sector.

In fiscal 2018-19, Bangladesh exported garment items worth $35 billion, and 63 per cent of the garment items were made from local raw materials. As a result, the retention value was also high at $15 billion, according to BTMA President Mohammad Ali Khokon.

On the other hand, the retention value from the imported raw materials was only $3.25 billion, he said in the letter.

The BTMA also demanded the import prices of yarn be scrutinised at the land ports along the Bangladesh and Indian bordering areas.

Meanwhile, the Indian clothing manufacturers have already taken steps to save their domestic industry.

On May 22, Rakesh Biyani, president of the Clothing Manufacturers Association of India (CMAI), sent a letter to Indian Textile Minister Smriti Zubin Irani to request an additional duty on import of apparels from Bangladesh.

The CMAI said the domestic clothing industry is under threat because of duty-free import from different countries, including Bangladesh.

Thanks to the duty-free trade benefit, Bangladesh's garment export to India has increased a lot in recent time despite having a 12.50 per cent countervailing and provincial duty.

Bangladesh has been enjoying duty-free trade benefit to Indian markets from 2011 under the South Asian Free Trade Area (SAFTA).

Under the SAFTA, Bangladesh enjoys zero-duty benefits on the export of all goods -- including apparel products -- except 25 alcoholic and beverage items.

In fiscal 2017-18 and 2018-19, Bangladesh exported $566 million worth of garment items to India and imported $7.74 billion worth of textile-related items, including raw cotton, cotton yarn, fabrics and textiles, according to Khokon.