Textile Sector

Overview

The textile industry or apparel industry is primarily concerned with the production of yarn, and cloth and the subsequent design or manufacture of clothing and their distribution. The raw material may be natural or synthetic using products of the chemical industry.

The textile and clothing (T&C) industries provide the single source of economic growth in Bangladesh's rapidly developing economy. Exports of textiles and garments are the principal source of foreign exchange earnings. Exports of textiles, clothing, and ready-made garments (RMG) became 77% of Bangladesh’s total merchandise exports. By 2013, about 4 million people, mostly women, worked in Bangladesh's $19 billion-a-year industry, export-oriented ready-made garment (RMG) industry. Bangladesh is second only to China, the world's second-largest apparel exporter of western brands. Sixty percent of the export contracts of western brands are with European buyers and about forty percent with American buyers. Only 5% of textile factories are owned by foreign investors, with most of the production being controlled by local investors.

Textiles have been an extremely important part of Bangladesh's economy for a very long time for a number of reasons. Bangladesh is the world's second biggest exporter of clothing after China. Readymade garments make up 80 percent of the country's $24 billion in annual exports and 15 percent share of GDP. Consultancy firm McKinsey and Company has said Bangladesh could double its garments exports in the next 10 years. In Asia, Bangladesh is the one of the biggest largest exporter of textile products providing employment to a great share percent of the work force in the country. Currently, the textile industry accounts for 45% of all industrial employment in the country and contributes 5% of the total national income. However, although the industry is one of the largest in Bangladesh and is still expanding, it faces massive challenges, principally because the country does not produce enough of the raw materials necessary, unfavorable trade policies, and inadequate incentives for expansion. As a result, Bangladesh's textile industry relies heavily on imports, and the country does not earn as much foreign exchange from its textile industry as it should. Due to increasing demand of sustainable apparel design, environmental changes, market competition, unpredictable consumer demand, market trends of variety, short product life cycles and low barriers of entry the textile and apparel industry is one of the most highly competitive manufacturing sectors in the world. As obstacles to trade among nations have declined due to improved transportation systems, technology transfer and government cooperation, the industry has seen a rapid increase in globalization and competition. The all Bangladesh textile mills association and individuals needs to enhance the quality of its products. However, the potentials in the RMG can be realized only if the challenges in some areas like – infrastructures, compliances, workforces supply, suppliers’ performances, raw materials, political stability are tackled.

Spinning industry

Spinning is a major sub-sector of the textile industry. It is part of the textile manufacturing process where three types of cotton fibre are converted into yarn, then fabrics, which undergo finishing processes such as bleaching to become textiles. The textiles are then fabricated into clothes or other products. There are three industrial processes available to spin yarn, and a handicraft community who use hand spinning techniques. Spinning is the twisting together of drawn out strands of fibres to form yarn, though it is colloquially used to describe the process of drawing out, inserting the twist, and winding onto bobbins.

Bangladesh has numerous recently-constructed spinning and weaving mills capable of supplying quality yarns and fabrics for the export-oriented RMG sector, however production costs are believed to be about 4 percent higher than in India or China. Efforts to improve environmental and labor standards may affect costs in the short run, but over the longer term, this will undoubtedly help ensure continued competitiveness as more global retailers demand assurances from their suppliers. There has been some concern that imported fabrics for the RMG sector (under a special duty drawback incentive) may also be threatening the competitiveness of the locally produced fabrics. However, recent trends seem to indicate that Bangladesh competitiveness is improving, particularly in the higher quality categories. Local knitters and weavers are increasingly using domestically produced yarn and fabric as transportation costs and delivery schedules are improving.

Bangladesh’s spinning sub-sector of the textile industry has grown significantly over the last two decades in response to a growing demand for yarn from domestic textile producers and the export-oriented ready-made garment (RMG) sector. However, the rate of growth has slowed considerably recent years due to ongoing energy constraints (i.e the limited availability of electric power and natural gas). Most spinning mills are now operating at less than full capacity as they also face increasing international competition, with imported products generally selling for about 4 percent below the domestic price.

In FY 2012/13, Bangladesh yarn production is estimated at 688,000 tons, an increase of about 12 percent from FY 2011/12 production. Fabric production in FY 2012/13 is estimated to reach at 3.95 billion meters, up 4 percent from FY 2011/12 production. In addition, an estimated 650 million meters of fabric are produced by the small-scale handloom industry which meets about one third of the domestic demand for fabrics. In FY 2013/14 yarn production and fabric production are forecast to increase further to 720,000 tons and 4 billion meters respectively.

History of Textile Industry in Bangladesh (Post 1971)

From 1947 to 1971 the textile industry, like most industries in East Pakistan, were largely owned by West Pakistanis. During that period, in the 1960s, local Bengali entrepreneurs had set up their own large textile and jute factories. Following its separation from East Pakistan, the newly formed Bangladesh lost access to both capital and technical expertise.

Until the liberation of Bangladesh in 1971, the textile sector was primarily part of the process of import substitution industrialization (ISI) to replace imports. After the liberation, Bangladesh adopted export-oriented industrialization (EOI) by focusing on the textile and clothing industry, particularly the readymade garment (RMG) sector. Immediately after the founding of Bangladesh (1971), tea and jute were the most export-oriented sectors. But with the constant threat of flooding, declining jute fiber prices and a significant decrease in world demand, the contribution of the jute sector to the country’s economy deteriorated.

In 1972, after the independence, the new government nationalized the textile industry, as it did with many other businesses in which West Pakistanis had been the principal owners. Although there were some Bangladeshi industrialists, they did not form a large or politically powerful group and thus had to surrender control of their factories to the government as well. All of the country's textile factories were then nationalized and organized under the Bangladesh Textile Mills Corporation, or BTMC.

The industry remained under the control of the BTMC until 1982-83. Bureaucratic obstacles combined with other problems such as low productivity in the labor force, lack of planning, indiscipline, lack of accountability, and poor machine maintenance and operation resulted in a lack of profit. The government thus gradually denationalized the production of textiles. Factories were privatized, beginning with the dyeing and weaving units. Since that time, much of the industry has been privatized through auctions and other means. After privatization, the quality of the fabrics produced improved significantly, leading to a great increase in the demand for Bangladeshi textiles in both the international market, as well as the export oriented garment industry of Bangladesh. This launched the industry into a period of rapid growth that is continuing at present. However, the textile industry has seen the application of many new technologies over the centuries.

How political turmoil (2013) affected the Textile industry?