Readymade garment (RMG) factory owners have written to the commerce ministry demanding a 2.5-fold increase in the export-oriented knitwear industry's wastage rate.
Their argument is that the wastage rate has increased in the production of high-cost knitwear items.
The current wastage rate is 16%, and factory owners have demanded that it be raised to 40%.
In the export-oriented composite knitwear industry, the 16% wastage rate set by the commerce ministry for the whole process of production – from cotton to yarn to fabric to finished products (T-shirts and others) – has been in effect for more than two decades.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA), and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) wrote the letter on 7 January.
Ministry officials were stunned by the proposal as it is generally assumed that the use of modern technology will bring the wastage rate down.They were worried that cotton imported under bond facilities for export purposes might be sold in the open market if the demand was met.
A meeting chaired by Additional Secretary (export) to the commerce ministry Md Hafizur Rahman was held on Tuesday. BGMEA Director Shehabudduza Chowdhury, BKMEA Senior Vice-President Mohammad Hatem, Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon, and officials of the tariff commission and the Customs Bond Comissionarate were present there.
A committee was formed at the meeting, and it was asked to submit a report on the actual wastage rate at different stages of production after visiting factories, and that of different countries, including India, Pakistan, and Sri Lanka. It was also asked to provide necessary recommendations.
Requesting anonymity, a ministry official who attended the meeting told The Business Standard the documents containing information on how the 16% wastage rate had been set back in 1998 could not even be found.
He said the use of technology in the RMG industry had increased a lot in the last 22 years and this should have reduced wastage.
But factory owners, he said, had suddenly demanded increasing the wastage rate 2.5 times.
"This naturally raises a question. Have they been doing business despite facing losses for all these years? That is why the committee was formed. Its members will review the cost sheets of different factories and collect information on the wastage rates of other countries before recommending a new rate," explained the official.
Factory owners told the meeting they used to make seamless T-shirts in the past and those only had stitches in sleeves. No sewing was needed on either side.
But now they need to sew both sides,and thus fabric needs to be cut from both sides. This has caused wastage to increase, and that is why they have demanded an increase in the wastage rate.
BTMA President Khokon said only a committee had been formed at the meeting but no decision was made.
He said another meeting would be held after getting the report from the committee.
Pradeep Kumar Gianchandani, lab technician in the textile engineering department at Mehran University of Engineering and Technology in Pakistan, wrote in a December 2010 article on Fiber2Fashion.com that the textile cotton spinning industry usually gives up to 84% yield and this can be increased by 1-2%.
Laila Hossain and Mohidus Samad Khan of Bangladesh University of Engineering and Technology published an article titled "Water footprint management for sustainable growth in the Bangladesh apparel sector" in September last year.
They wrote, "It is assumed that 100kg cotton lint produces 95kg yarn and 100kg yarn produces 95kg fabric. Considering this, the wastage rate from cotton to fabric is 9.75%."
Factory owners in their letter said Bangladesh basically used to produce tubular-shaped basic T-shirts in the 90s and the wastage rate was 16% at the time.
But in the current era of fashion, production types and qualities are completely different. Various types of yarns and fabrics are used to make knitwear products of different designs and qualities where the wastage rate is 20-40%. In some cases, it is more than that.
The letter said when the wastage rate was set at 16%, knit clothes would be processed using local methods, dyed using local machines, dried in open fields and home-made calendar machines would be used to give the finishing touch.
However, these methods have become completely obsolete, and the processes now need state-of-the-art machinery. That is why it is not possible to keep the wastage rate at 16%.
Factory owners said the wastage rate is currently determined using modern machinery and customers are charged for products accordingly. That is why increasing the wastage rate would not harm industries.