Cotton spinning mills
Our Chief Advisor during his last visit to the Indian Capital had a meeting with the Prime Minister of India in which he emphasized an action plan to reduce the huge trade imbalance with India. Non-tariff barrier introduced by India acts as hindrance to entry of our products opposed to the Cul-de-Sac rules followed by our country. So it is irrational to ask for such favour as each country adopts polices suitable for its interests. Ironically, our Trade Policy suits the other country.
Our trade policy has made the Cotton Spinning Sector depressed due to pouring in huge quantity of Cotton Yarn by land route from India daily to feed the composite textile mills. Devaluation of the Indian currency by about 17-18% has made their export business favourable to the detriment of our interest. Our Cotton Spinning Mills serving as backward linkage to our RMG industries became non-competitive due to a) Import of raw cotton at high price now reduced internationally by about USC 25/30 per pound due to economic meltdown and b) Imported cotton yarn. This sector has special status in the economy for saving foreign currency and employment of a few million people. Failure by the policy makers to make a thorough review of import of yarn urgently shall cause untold losses to the sector, create chaos for its inability to retain employment, hold back repayment of debt to the financial institutions involving billions of taka in the form of loan and advance and eventually shall be a nightmare scenario in the whole country. Therefore, it is very much expected that our government will urgently make industry friendly plans to ensure that cotton spinning mills are run on commercial basis and protected from uneven external competition. Perhaps duty draw back facility for composite mills (15% customs duty on imported cotton yarn) should be enough to see off closure threat of our mills.
The World Bank has already forecast that our export earnings and remittances are likely to shrink in the near future in view of global financial crisis and, therefore, management in the downturn is very important for the economy. Demand of our RMG products in the international market is also falling for which offloading people from factories is imminent, let alone launching new ventures. So, every firm is now safeguarding its cash and desperately trying to find money to meet basic obligations like paying their employees and bank debts.
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