Bangladeshi spinners are considering shifting their production lines outside the country, as it would ensure raw material supply and also help them conserve energy.
Textile mill operators spin cotton into yarn and fabrics, which are the key inputs that go in production of readymade garments. By setting up their production lines abroad, they could spin yarn in those counties before importing the same to Bangladesh.
Each year, Bangladesh requires more than 3.7 million bales of cotton, but domestic production hardly meets two percent of the demand. Hence, the country imports 30 percent of its cotton requirement from India, another 30 percent from Uzbekistan and the rest comes from Pakistan, the US and some other countries.
In view of the same, India and Uzbekistan are the two preferred locations for the textile millers who intend to invest outside Bangladesh to ensure regular supply of raw inputs, in the wake of world market volatility.
Last year, the world cotton and yarn prices remained highly volatile and the raw material prices jumped almost three times over the previous year's prices.
Moreover, spinners say, cotton producing countries like India tried to benefit from the situation by levying additional taxes or at times even by suspending cotton exports.
In spite of being a cotton producing nation, some Indian companies are also setting up textile mills in Uzbekistan to ensure future yarn supply.
However, experts rule out establishment of spinning mills in Uzbekistan as a feasible option for Bangladeshi spinners, as they would have to endure high freight charges and long lead time to ship yarn from Uzbekistan.
There are more than 400 textile units of different sizes and categories in Bangladesh, set up with an investment of around US$ 3.5 billion.
These units satisfy 90 percent of yarn demand of knitters and cater to 40 percent of fabric demand of weavers. Knitwear and woven exports contributed around US$ 18 billion to the country's overall export earnings of US$ 23 billion, during last fiscal.
Fibre2fashion News Desk - India