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Textile units at receiving end of new EU RoO
Apr '11
European Union's new rules of origin (RoO) have badly hit the textile mill owners in Bangladesh, as the new rules permit garment exporters to procure fabrics from other countries, while turning a blind eye to the fabric output of the around 1,300 domestic textile units in the country.

The new RoO of the EU which came into effect from January 1, 2011 has granted duty-free access to the clothing exporters to the 27 member-EU nations, even if they buy fabric from other countries.

The earlier RoO for years together served as a protective cover for the domestic textile industry, as it necessitated, garment exporters to source major part of the fabrics from the local textile units, if they wished to enjoy the duty-free access to the EU, the world's biggest apparel market.

Thus, it is being alleged by the textile millers that the new RoO have hard hit their businesses, as most of the RMG producers, source fabrics from foreign countries, overlooking domestic textile units.

Further, though the larger firms have been able to withstand the impact of the new rules, it has affected to a great extent, the hundreds of thousands of small units, which enjoyed protection under the earlier rules.

It is only now; after three months, of the new rules becoming effective that, its effects on the country's primary textile industry, has started becoming apparent.

Further, wherein due to liberalisation of EU rules, several small and medium scale firms are already finding it difficult to survive, ongoing issues like gas and power crunch and rising prices of cotton are adding to their miseries.

Over the last 20 years, textile units, particularly export-oriented units have grown robustly, as the previous EU rules which remained in effect from 1990s to December 2010, compelled the garment producers to source majority of the fabrics from domestic markets, and thus served as the single most vital catalyst to the growth of Bangladeshi textile sector.

Also, in many of the instances, the rules were the sole reason, for which several investors established their plants in the country. But now, owing to the new rules, garment manufacturers from Bangladesh have started sourcing fabrics from other countries like China, India, Turkey, Pakistan, etc.

The domestic primary textile mills last year churned out around 2,000 million metres of woven fabrics and 1,700 million kg of cotton yarn.

Fibre2fashion News Desk - India

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