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Rising per capita income, stricter anti-smuggling measures and the production of value-added apparel items have catapulted Bangladesh’s annual yarn and fabrics sales to $9 billion.
The consumption has grown 50 per cent since the financial year of 2016-17 when the size of the local yarn and fabrics market was $6 billion, data from the Bangladesh Textile Mills Association (BTMA) showed.
“It has been noticed over the last few years that the market for local yarn and fabrics has grown by almost $1 billion every two years,” said Mohammad Ali Khokon, president of the BTMA.
On average, a female consumes 40 metres and her male counterpart consumes 25 metres of fabrics with each metre costing $1.40, according to the BTMA.
Currently, 250 spinning mills and 600 weaving mills produce 7 billion metres of fabrics a year to meet the domestic demand. The investment aimed at setting up the mills to produce yarn and fabrics has been more than $6 billion.
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Besides, there are many other small and medium-sized spinning and weaving mills in various parts of Bangladesh. They make a few million metres of fabrics each year and have invested a few hundred million dollars, industry insiders say.
“The buying capacity of the people of the country has increased, so a lot of consumers can afford more apparel items and are paying additional prices for value-added items,” said Khokon.
Consumption has grown 50 per cent since the financial year of 2016-17 when the size of the local yarn and fabrics market was $6 billion
Bangladesh’s per capita income stood at $2,793 in 2021-22, an increase of 7.8 per cent from a year earlier, according to the Bangladesh Bureau of Statistics. It has more than quadrupled since 2009.
“This has driven up the overall consumption of fabrics in the local market,” Khokon added.
Khorshed Alam, chairman of Little Group, a fabrics producer, says local manufacturers meet 95 per cent of demand as they have increased investments over the years.
Mainly salwar kameezes, lungis, saris and shirts are supplied by local millers, he said.
The production of fabrics has seen ups and downs in recent years.
At the peak of the coronavirus pandemic in 2020, the growth of local fabrics production slowed owing to a fall in demand and there was a lot of stockpiling of unsold fabrics and yarns at the factory level.
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Following the receding of Covid-19 outbreaks, the demand for textile items made a comeback and millers almost ran out of stock.
But owing to the rising cost of the US dollar and higher inflation driven by the crisis induced by the Russia-Ukraine war, the demand for fabrics has fallen again to some extent.
The value of the American greenback has appreciated by about 25 per cent against the taka in the past one year owing to the dollar shortages. Similarly, consumer prices have stayed at an elevated level, hurting the pockets of the consumers and thus sales.
The demand is expected to pick up again as the sales season is knocking on the door. Yarn and fabrics worth $2 billion are sold during the season, which includes Pahela Baishakh, Eid festivals and Durga puja.
Moreover, before the onset of the winter season, the consumption of local yarn and fabric rockets as warm clothes are made for local consumers.
Yarn and fabrics worth $5 million are also imported mainly from China, Italy, Pakistan and India to make apparel items such as suits and salwar kameezes, according to Khokon.
The fabrics for suits are largely brought in under baggage rules as traders will hardly make any profit if they have to import them commercially using formal channels, he said.
Recently, the government has tightened rules involving utilisation declaration (UD), a customs document needed to have raw materials released from customs stations and also for exports, securing preferential trade facilities, and cash incentives.
Measures have been taken so that fabrics imported under the bonded warehouse facility for the export markets are not sold locally, Khokon said.
Abdullah Al Mamun, managing director of Abed Textiles Ltd, a Narsingdi-based textile producer, says the domestic market has expanded in the past several years.
However, factory output has been affected by the recent gas and power shortages, which were caused by a decline in the supply of energy owing to insufficient local production and a pause in the purchase of liquefied natural gas from the international spot market.
Mamun says the sales in the sales season would rely on the supply of gas.
“Although the price of gas has been increased recently, the supply is yet to reach to the expected level for the factories to run in full swing,” he added.
The government has decided to resume the import of LNG to give a boost to the supply situation with a view to meeting an expected spike in demand as temperatures are set to rise. And Mamun hopes the gas situation may improve once the LNG import restarts.
(TDS)
