Bangladesh govt supports domestic spinners, weavers

15 Nov '11

2 min read

The Bangladesh Government has doubled the cash incentives for garment exports to help the domestic spinners and weavers who have been hit by international cotton market volatility.

The cash subsidy has been raised to 10 percent from the earlier 5 percent to support the spinners and weavers whose competitiveness has badly suffered in past few months due to global cotton market volatility, the Bangladesh Bank said.

However, only the Bangladesh Textile Mills Association (BTMA) members will benefit from the cash incentive, either for overseas export or domestic supply in the current fiscal, according to the central bank.

The cash subsidy would also be made available on export of garments prepared from domestically procured yarn or fabrics. A drop in sales of yarn and fabrics alongside a fall in cotton prices and relaxation in its Rules of Origin (RoO) by the EU in January this year adversely affected the competitiveness of the weavers and spinners in Bangladesh.

The 30-count yarn, which is consumed extensively and which was being sold at around US$ 7 per kg a few months back, is now being sold at almost half the price at around US$ 3.5 per kg, following which the spinners are suffering losses.

RoO relaxations have also resulted in a major fall in demand for domestic fabrics, as domestic garment producers prefer to import fabrics so as to avail the 12.5 percent duty benefit that the Eurozone offers under the Generalized System of Preferences (GSP).

The Government would subsidise those importers who imported expensive cotton during August 2010 to March 2011. Though industry experts see this as a welcome move, they believe that the incentive would not prove sufficient to mitigate the losses suffered by the spinners and the weavers.

Fibre2fashion News Desk - India

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