According to the former president of the BTMA, Indian yarn producers are in an advantageous position, compared to Bangladeshi producers as India has announced a stimulus package for the sector and is providing R&D funds to manufacturers.
Moreover, India produces raw cotton and manufactures capital machinery. The Indian government devaluated the rupee against the dollar.
“On the contrary, Bangladesh is a cotton and capital machinery importer but manufacturers hardly enjoy benefit from the government, Chowdhury said..
“We want temporary financial assistance from the government. If the situation improves, the government may cut such assistance,” said Chowdhury..
“Abdul Hai Sarker urged the government to provide a financial benefit to exporters for a temporary period, besides the existing 5 percent cash incentive..
“According to Bangladesh Bank data, L/Cs (letters of credit) worth $205.39 million were settled in July-October of 2008 compared to $142.70 million in the same period a year ago to import cotton yarn..
“In July-October of 2008, fresh L/Cs worth $150.04 million were opened to import cotton yarn against $141.77 million in the same period of 2007..
“According to BTMA statistics, 43 new spinning mills were set up in 2008 (January-December) with 9,44,744 spindles, up from 28 mills installed with 4,42,848 spindles in 2007..
“The country has a total of 341 spinning mills with an annual production capacity of 1600 million kg of yarn and total investment in the sector is 4.0 billion euros, according to BTMA statistics..
“Sarker said they can sell yarn at $2.55 per kg produced in their factories, but the same kind of Indian yarn sells at $2.15 per kg..