Talks on extra duty on yarn imports end without consensus

The garment exporters, textile millers and senior officials of the Bangladesh Trade and Tariff Commission (BTTC) could not reach a consensus on a proposal to impose a 20 percent safeguard duty on yarn imports, pushing the issue to the commerce ministry for a final decision.

At a meeting held at the BTTC office in Dhaka yesterday, leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) opposed the extra duty proposal by local spinners.

The apparel makers and knitwear manufacturers said it would increase production costs and hurt the global competitiveness of local garment items.

During the meeting, chaired by BTTC Chairman Md Abdul Gafur, three alternatives were discussed. Those are imposing a 20 percent safeguard duty on yarn imports, providing a 5 percent incentive to garment exporters for using locally spun yarn, or withdrawing the bonded warehouse facility for importing 20 to 30 count yarn, which local mills say they can adequately supply.

On condition of anonymity, a businessman present at the meeting said BGMEA and BKMEA leaders agreed only to the incentive option and rejected the other two proposals.

They argued that a safeguard duty would raise yarn prices, while withdrawal of the bond facility would disrupt exporters’ operations and lead to loss of business.

The businessman said a segment of the Bangladesh Textile Mills Association (BTMA) leaders also agreed to the 5 percent incentive proposal. As no consensus could be reached among the stakeholders, the issue will now be sent to the commerce ministry for a decision.

A spinner present at the meeting said many importers misuse the bonded facility by selling imported yarn in the local market illegally, which he said was damaging domestic producers.

He said the domestic yarn market for fabric and garment production is worth around $12 billion and is mainly supplied by local spinners. However, around $5 billion worth of locally produced yarn remained unsold last year as demand was met through imported yarn.

Meanwhile, a knitwear exporter said sales of yarn from local textile mills had declined to some extent, but this was not due to yarn imports. 

He claimed yarn imports declined during July-December last year compared with the same period a year earlier.

According to him, the fall in yarn sales was due mainly to a slowdown in garment exports over the past few months. “When overall garment exports fall, yarn consumption also falls,” he said.

Some businessmen present at the meeting said the government may consider imposing a 10 percent safeguard duty as a compromise.

The BTMA had earlier urged the government to impose a 20 percent safeguard duty on imports of 20 to 30 count yarn to protect the country’s $23 billion primary textile sector. Local spinners say the measure is necessary to protect the domestic industry from unfair competition.

In the last week of December, BTMA leaders accused India of dumping cheap yarn in Bangladesh and said local mills were sitting on unsold stock worth Tk 12,000 crore.

According to the spinners, Bangladesh imported $2 billion worth of yarn from India in fiscal year 2025-26, with local mills consuming around 1,600 tonnes daily. From April to October 2025, imports stood at $950 million.

They also said Bangladesh has become the largest destination for Indian yarn exports, accounting for 44 percent of the total, followed by Cambodia at 21 percent.