Local spinners look to set up mills abroad to ensure a steady supply of raw materials in an increasingly unpredictable global environment.
“Setting up mills abroad will give us double benefits: it will ensure yarn and save energy,” said A Matin Chowdhury, managing director of Malek Spinning Mills.
India and Uzbekistan, two major sources of Bangladesh's cotton imports, are chosen by primary textile millers as investment destinations.
Chowdhury, also former president of Bangladesh Textile Mills Association (BTMA), said he plans to set up a one-lakh-spindle factory in India and bring yarn to Bangladesh.
Textile millers operate machines that spin cotton to produce yarn and fabrics, the major ingredient for producing readymade garments.
Following volatility in the global cotton and yarn markets last year, the issue hit the spotlight when prices of these raw materials went up three times compared with what it had been a year ago.
Moreover, cotton producing countries such as India try to cash in on the situation by imposing extra tax or withdrawing it and suspending cotton exports sometimes, according to businessmen.
Bangladesh requires over 37 lakh bales of cotton a year, according to BTMA data. Of which, 30 percent comes from India and 30 percent from Uzbekistan. Locally produced cotton meets only 2 percent of the market demand. The rest are imported from the US, Pakistan and some other countries.
“Despite being a cotton producing country, India is establishing textile mills in Uzbekistan considering security of its yarn in future,” said Mehdi Mahbub, chief executive officer of Best Sourcing Business Advisory Services.
Indian textile company Spentex bought two textile mills near Tashkent in August 2006 with an investment of $81 million. It also acquired one more textile company in Ferghana in 2007 and made further investment of $6 million. More Indian millers set up factories in Uzbekistan in the recent years.
“Businessmen who are financially capable can invest in India, a country with better infrastructure,” said Jahangir Alamin, president of BTMA.
“But spinning mills in Uzbekistan will not be viable for us,” said the BTMA president explaining that freight charge and lead time to receive yarn from Uzbekistan would be huge.
Bangladesh has over 400 textile mills of different categories and sizes with an investment of around $3.5 billion.
These mills meet 90 percent yarn needs of knitters and provide 40 percent fabrics for weavers. Knitwear and woven sectors accounted for nearly $18 billion of exports out of $23 billion earned by Bangladesh in fiscal 2010-11.
News:
The Daily Star, Sun, 05/02/2012If you liked the post then,
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