Zero Duty on Yarn Imports Pushes Bangladesh Spinning Mills Towards Shutdown

Bangladesh’s yarn industry, once considered a strong pillar of the country’s textile and garment sector, is now going through one of its toughest phases. Spinning mill owners and industry associations say the sector is slowly moving towards shutdown because of zero import duty on yarn. If the situation does not improve, many spinning mills may close by February, leaving thousands of workers and small business owners without jobs or income.

At present, Bangladesh allows yarn to be imported at zero duty under the bonded warehouse facility. This system was created mainly to support the ready-made garment industry, which is the backbone of the country’s exports. Under this facility, garment factories can import raw materials without paying customs duty, as long as the finished products are exported.

Because of this policy, garment manufacturers are now importing high-quality yarn at cheaper rates from countries like India and China. Imported yarn is often available at a lower price and sometimes with better consistency in quality. As a result, many garment factories are choosing imported yarn instead of buying yarn produced inside Bangladesh.

Local spinning mill owners say this has created an unfair situation. They claim that domestic yarn is no longer in demand because imported yarn is cheaper and easily available. According to industry estimates, local spinning mills are running far below their production capacity, and some units have already reduced operations to cut losses.

Industry bodies representing textile and spinning mill owners have raised serious concerns. They say that if zero duty on yarn imports continues, the domestic spinning sector will not survive. Many mills are struggling to pay salaries, electricity bills, bank loans, and raw material costs. Several mill owners fear that they may be forced to permanently shut down operations if losses continue.

The crisis is not just about factory owners. If spinning mills close, the impact will spread across the economy. Thousands of workers employed directly in spinning units may lose their jobs. In addition, many small traders, transporters, cotton suppliers, and service providers who depend on the spinning industry will also be affected. This could lead to widespread financial stress in several industrial areas.

In response to the growing crisis, textile mill owners’ associations have warned of a nationwide shutdown of spinning units starting from February 1. They say this step is not taken lightly but is necessary to draw the government’s attention to the seriousness of the problem. According to them, without policy support, running spinning mills has become financially impossible.

Sources say that the Yunus administration has already sent a letter to the National Board of Revenue regarding the issue. The letter reportedly highlights concerns raised by industry stakeholders and the possible consequences of continuing zero-duty yarn imports. However, as of now, no final decision has been announced.

Spinning mill owners are demanding a review of the current import policy. They believe that some level of duty on yarn imports is necessary to protect local manufacturers. According to them, the garment sector and spinning sector must grow together, not at the cost of one another. They argue that Bangladesh invested heavily over the years to build domestic spinning capacity, and allowing it to collapse would be a long-term mistake.

Economists say the issue is complex. On one hand, the garment industry needs low-cost raw materials to remain competitive in the global market. On the other hand, ignoring the spinning sector could increase long-term dependence on imports. This may expose the country to supply risks, foreign price fluctuations, and loss of local industrial strength.

Experts suggest that a balanced solution is needed. This could include partial duty adjustments, policy support for modernising spinning mills, or special incentives for garment factories to use locally produced yarn. Without such steps, the current crisis may deepen further.

For now, uncertainty continues. With February approaching fast, the future of Bangladesh’s spinning mills hangs in the balance. Industry leaders hope the government will act quickly to prevent shutdowns, protect jobs, and ensure that the textile value chain remains strong and sustainable.