SMEs grapple with uncertainty as yarn imports via land port are suspended

The interim government's decision to suspend yarn imports from India via land port following pressure from domestic mills eager to expand their market share has left small and medium enterprises (SMEs) to grapple.

Many fear that the move could erode SMS's competitiveness in the export market, tightening access to affordable raw materials and threatening their foothold in global supply chains.

Stakeholders believe the government's decision will hit the small and medium businesses hard in the knitwear sector, especially those who import yarn from India at low prices by land against small purchase orders. Moreover, some worry that it will allow domestic mills "syndicate" to get stronger.
Leaders of business organisations have sought a review of the decision by the National Board of Revenue (NBR), who made the decision public on Tuesday.

Kazi Mostafizur Rahman, in charge of audit, modernisation and international trade at the NBR, told bdnews24.com: "No review is being held."

Under the retracted order issued on Aug 29, 2024, 100 percent of export-oriented industries with customs bond licences were allowed to import yarn via these land ports. Imports through land ports were still restricted for other businesses.

With the latest order, the NBR imposed a blanket ban on all yarn imports via the land ports.

Previously, yarn imports from India were only routed through five land ports, including Benapole, Bhomra, Sonamasjid, Banglabandha and Burimari.

The biggest buyers of yarn in Bangladesh are the ready-made garment and textile sectors. Alongside imports, they meet their demands through domestic mills as well.

The maximum count of yarn used in the ready-made garment sector is 30 to 32. Depending on the type of fabric to be made or the purpose for which it will be used, the count helps determine the quality of the yarn.

The yarn count is set at a maximum of 100 with the number indicating the weight and quality of yarn. The higher the number, the more the weight and thicker the yarn.

The Ministry of Commerce has stopped importing yarn from India through land ports at the request of the Bangladesh Textile Mills Association (BTMA).

Bangladesh garment sector received a huge portion of yarns through import from India, mostly through the Benapole port.

Indian traders used to store yarns manufactured in the northern and southern regions in Kolkata, and from there it used to be transported to by land.

The price of these yarns coming through Benapole port was lower than the price of yarns coming through sea ports. And the BTMA had been complaining that the low-priced yarns had been detrimental to the domestic textile mills.

Why not import yarn from India if it is available at a lower price, BKMEA President Mohammad Hatem has asked. BTMA, however, has presented two reasons in favour of the NBR's decision.

The first is to protect domestic mills; the second is that 60 count and even 80 count yarns are being imported in the name of low count yarn, although high count yarns are not used in the ready-made garment sector. Those yarns arrive in Bangladesh for use in the domestic market.

The ready-made garment sector gets back-to-back letters-of-credit facilities for yarn imports. So, these yarns imported for use in export goods are duty-free. Only customs charges have to be paid.

Another reason the BTMA presented for opposing the import is that the entry of yarns "in excess of the LC declaration" into the country's market was harming the government and domestic mills. �"bdnews.24.com