The Bangladesh local garment exporters might face tough competition from India, after signing of the proposed Free Trade Agreement (FTA) between India and the European Union (EU) as India is negotiating with the EU, to get duty-free access to the market for apparel products. To face the emerging challenges, Bangladesh need to enhance its production capacity of yarn and fabric which will help local apparel exporters, industry insiders said.
The local exporters usually have to spend more or less 30 days to import fabrics from India whereas the exporters of their next-door neighbour can make shipment within the same time. It would really be a big threat for them if failed to make themselves ready to tackle the situation.
Local exporters are already in dire straits following the emerging pressure from the buyers mainly from those of the USA and EU. The signing of FTA would no doubt be a big challenge for Bangladesh; so the government needs to ensure all sorts of support to make raw materials available to lower the lead time.
Bangladesh might lose competitiveness largely in basic RMG products like T-shirts and home textiles. If they offer higher lead time, then buyers would not consider importing goods from Bangladesh. In this backdrop, if India gets the duty-free facility, it will have a major negative impact.
However, President of Bangladesh Textile Mills Association (BTMA) Jahangir Alamin said that the existing mill owners cannot utilise their installed capacity for want of gas and electricity. With the government ensuring adequate supply of gas and electricity, production of fabric and yarn would automatically increase.
Meanwhile, according to a recent study conducted by the ministry of textiles and jute (MoTJ), the country's private sector meets nearly 50 per cent of the total demand of yarn and fabric, while the rest is imported.
The MoJT study showed that the country's aggregate annual demand for cotton yarn is around 2,172 million kg. Local mills produce about 1,051 million kg. Besides, itâ€™s annually needs 6,112 million metres of fabric, and the demand would increase up to 8,164 million metres within the year 2015.
According to diplomatic sources, the India-EU free trade area negotiation under which New Delhi might get the zero tariff access is likely to resume late this year and it is expected that it would be concluded by next year. EU provides duty-free access facility to Bangladesh and Pakistan while Indian products are subject to about 12 per cent duty.
India being self-reliant in production of cotton, yarn and fabric are already one step ahead of Bangladesh relating to shipment lead time. If Bangladesh fails to ensure availability of yarn and fabric locally, exporters would face a serious setback after the FTA signing.
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