Stocks of unsold yarn of local millers have grown to over one million tonnes over the past five months or so for a drop in demand for garments from the domestic and international consumers.

The local market demand for garments has dropped by about 30 per cent while work orders from international clothing retailers and brands by around the same rate.

Moreover, export-oriented local weavers and knitters are not buying yarn they had booked with spinning mills around 15 months ago between $4.10 and $4.30 per kilogramme (kg).

Instead, they are opting for imported cotton yarn as it is a bit cheaper than the around $3.10 local spinners are now charging for per kg of yarn.

Bangladesh Textile Mills Association (BTMA), the primary textile sector's platform, sent a letter to the National Board of Revenue on May 23 requesting monitoring major yarn sales areas to discourage illegal trade.

It also sent letters to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) requesting buying local yarn.

Moreover, the BTMA is going to hold a press conference on the issue tomorrow.

Over 300 spinning mills which cater to the domestic markets are suffering for mainly three reasons, said Khorshed Alam, chairman of Little Group, one of the major yarn producers serving the local market.

The first is a fall in production in major weaving areas like Sirajganj because of frequent power cuts and the second is smuggling of garments from India through the use of passenger luggage, he said.

The last reason is a 30 per cent fall in demand for clothing items from consumers because of a price hike of basic commodities in local markets, he said.

Also chairman of a BTMA standing committee on the Development of Spinning, Weaving, Dyeing and Printing Mills, Alam himself has witnessed his cotton stocks rise to 21 lakh pounds over the past three months for the fall in demand.

He has another 10 lakh pounds of unsold yarn worth over $2.60 million although he is running his mills at 50 per cent capacity due to a shortage of gas.

A good number of people frequently bring three pieces, saris and shawls inside their luggage on trains without paying any duty. As a result, the consumption of yarn fell in the local markets, he said.

This is really profitable, he said, citing for instance that one person can bring along clothes worth Tk 2.6 lakh from Kolkata and sell those for Tk 4.5 lakh in Bangladesh.

"So, I am in trouble from two sides, with cotton lying idle alongside yarn spun in the mill. My investment is in trouble now," Khorshed said.

Since work orders from international clothing retailers and brands have dropped, the overall use of yarn also went down, said Mohammad Hatem, executive president of the BKMEA.

Even at the end of 2021, the price difference between local and imported yarn was anywhere between 30 cents and 50 cents per kg but now it was around 10 cents, he said.

Last year 14 lakh tonnes of yarn were imported and this year already 30 lakh tonnes have been brought in, said BTMA President Mohammad Ali Khokon.

So, the BTMA has suggested the woven and knitwear manufacturers and exporters to purchase more locally spun yarn for a win-win outcome, he said.

The primary textile sector has suffered losses worth $4 billion because of the price gap between the purchase price of cotton and falling price of yarn in the local markets over the last 15 months, Khokon said.

He said the yarn and garment (three pieces) were coming from India, China and Pakistan.

On one hand the sale of yarn has dropped, said Monsoor Ahmed, chief executive officer of the BTMA.

On the other, local millers cannot import cotton because of a dollar shortage and for loans from Export Development Fund (EDF) being limited to $20 million for each mill, he said.

Moreover, the local spinners cannot adjust the EDF loan within the stipulated 180 days as they cannot sell the yarn. As a result, many are facing problems in paying the EDF loan instalments, he added.

The spinners cannot use their full capacity not only for a gas shortage but also for high gas tariff, he added.