2024-07-08 13:30:03
The Bangladesh Textile Mills Association (BTMA) believes that the textile sector, which is suffering from energy crisis, is in danger of disappearing in the near future due to reduced cash support and incentives.
Mohammad Ali Khokon, the president of this association of industrial owners of the textile sector, says that half of the mechanical capacity is now inactive due to the gas crisis. Such initiatives will have dire consequences before the crisis is resolved or alternative assistance is introduced.
He said these things at a press conference at the organization’s office in Dhaka’s Caravan Bazaar on Saturday (July 7).
He said that if the cash assistance and incentives are reduced, this industry will be at serious risk and the progress of this industry will stop. The industry with huge potential may disappear in future like the jute industry of Bangladesh.
‘Cash assistance reduced due to LDC graduation in November 2026. But LDC graduation is still about two and a half years away and industries can get cash incentives till 2029 as a grace period even after LDC graduation.’
According to him, our neighboring country India graduated from LDC in 2004 but is still providing various policy support and incentives to its textile sector as an alternative to cash assistance on priority basis. But India is the second largest cotton producing country in the world and also in the second position in the world in textile technology.
In the name of LDC graduation, by reducing the incentives and policy support of the textile industry of Bangladesh, the way obstacles are being created in this industry, he claimed that this industry will soon reach the verge of destruction.
The export-oriented garment sector was receiving cash assistance ranging from a minimum of 1 to a maximum of 4 percent against exports. However, the government has begun reducing incentives in preparation for moving up from low-income status in November 2026. Because, if promoted to a middle income country, such assistance can no longer be given.
In Bangladesh Bank’s circular on June 30, the amount of incentives announced against 43 export products, including the garment sector, was reduced. Instead of customs, bond and duty draw back in the export-oriented domestic textile sector, alternative cash assistance has been reduced from 3 percent to 1.5 percent.
The existing 1.5 percent additional special support for textile exporters in the European region is increased to 5.5 percent instead of 1 percent. Additional benefit for all small and medium industries including export oriented garment sector is increased to 3 percent instead of 4 percent. Special cash assistance to ready-made garments sector is increased to 3 percent instead of 5 percent. The new incentive is effective from July 1.
In such a context, the leaders of the businessmen of the textile sector came to the press conference and expressed their concerns.
The president of BTMA cited the example of India and said that India has 15 percent incentive in apparel and textile sector and 10 percent incentive in sub-sector. The government is funding 40 percent of the project cost or Rs 40 crore for new industrial construction. In Andhra Pradesh, up to 50 percent capital assistance is provided to green factories. The government provides up to 25 percent of the capital expenditure for investments in textile parks in Gujarat. In the first 5 years of setting up the industry in Bihar, the cost per unit of electricity is estimated at Rs.2.
He said that the textile sector has not been able to carry out normal production activities due to energy crisis for the past 3 years. The mills are not able to utilize more than 40 to 50 percent of their production capacity due to acute gas shortage for the past few months. Production costs are almost doubling as production of yarn and cloth has drastically reduced, seriously undermining competitiveness in the sector with competing countries.
At present there are 519 spinning mills, 930 weaving mills and 322 dyeing-printing-finishing mills in the country as members of BTMA. The total investment in this sector in the last four decades is about 22 billion dollars. In the last financial year 2023-2024, about 86 percent of the country’s total export earnings were earned from the textile and apparel sector, of which BTMA members are suppliers of about 70 percent. At present, BTMA member mills supply about 90 percent of the yarn and 45 percent of the weaving requirement of the net sector within the ready-made garment industry.
BTMA’s member mills are contributing to the export earnings by meeting 100% of the domestic demand for denim, home textiles and terry towels.