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Spinning mill closures raise hackles of banking sector
25 Feb '09
2 min read
A number of spinning mills have closed down in Bangladesh, while many others have cut back their production by as much as 30-50 percent in the last few months. This is attributed to the unabated imports of yarn from India.
Indian yarn is considered to be fairly cheaper than yarn produced by Bangladeshi spinners, which is leading to an influx of yarn from India. This piquant situation is also accompanied by the slow down in global markets.
Till a few years back, Bangladesh had to import a large quantity of raw material in the form of yarn or fabrics to feed the overgrowing appetite of the burgeoning apparel export industry, which led to large scale investments in the spinning sector.
The textile industry to a large extent was helped by the banks who also saw an opportunity to grow their assets. But today these same banks face the reality of spinning mills, defaulting on their repayment schedules.
The moot question that is now troubling the banking sector is that their very survival is at stake now, since the banks have massive exposure to these mills and if the spinning sector collapses, it will take down with it the banking sector too.
Fibre2fashion spoke to an official of the Bangladesh Textile Mills Association (BTMA), who said, “Out of 341 mills, more than 10 mills have closed down & several other spinning mills have reduced their production capacity by almost 50 percent”.
He added by saying, “A meeting took place last Thursday, to discuss the issue and a high power committee has been formed to evaluate the whole issue, which will also put across suggestions to solve the problem”.
He continued by saying, “Committee will also submit a report giving suggestions about the stimulative package and the committee consists of President & Vice President of BTMA along with prominent members of the association”.
Indian yarn is considered to be fairly cheaper than yarn produced by Bangladeshi spinners, which is leading to an influx of yarn from India. This piquant situation is also accompanied by the slow down in global markets.
Till a few years back, Bangladesh had to import a large quantity of raw material in the form of yarn or fabrics to feed the overgrowing appetite of the burgeoning apparel export industry, which led to large scale investments in the spinning sector.
The textile industry to a large extent was helped by the banks who also saw an opportunity to grow their assets. But today these same banks face the reality of spinning mills, defaulting on their repayment schedules.
The moot question that is now troubling the banking sector is that their very survival is at stake now, since the banks have massive exposure to these mills and if the spinning sector collapses, it will take down with it the banking sector too.
Fibre2fashion spoke to an official of the Bangladesh Textile Mills Association (BTMA), who said, “Out of 341 mills, more than 10 mills have closed down & several other spinning mills have reduced their production capacity by almost 50 percent”.
He added by saying, “A meeting took place last Thursday, to discuss the issue and a high power committee has been formed to evaluate the whole issue, which will also put across suggestions to solve the problem”.
He continued by saying, “Committee will also submit a report giving suggestions about the stimulative package and the committee consists of President & Vice President of BTMA along with prominent members of the association”.
Fibre2fashion News Desk - India
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