The optimism that the home textile businesses once carried in the post-Covid export period has faded as exports have slipped from its peak and failed to fulfill expectations.
The industry has had negative growth since the middle of the previous fiscal year (FY23), and the downward trend is still present as of the first quarter of the current fiscal year (FY24), which runs from July to September.
The industry had a decline of 46.39% to $189.5 million in July–September of FY24, from $353.48 million during the same period of the previous FY (FY23), according to data from the Export Promotion Bureau (EPB).
For a long time, leather or jute goods were the country's leading export sector after ready-made garments.
Home textiles emerged as the country’s second top export sector in the financial year 2021-22 when the industries were turning around from the shock of the Covid-19.
However, within a year, the sector faced major setbacks.
The sector touched the milestone of $1 billion export earnings in FY21 ($1.13 billion) and cemented its position in FY22, when the sector earned $1.62 billion with a growth of 43.28% than FY21.
The sector's honeymoon phase, however, came to an end as earnings dropped to $1.09 billion in FY23, down 32.47% from FY22, and the downward trend is still there.
The sector has gradually veered off course as a result of a significant drop in demand caused by inflationary pressures, the implications of the current Ukraine-Russia war and worldwide consumers' reduced spending power, said the industry insiders.
They also said that along with the global difficulties, internal issues such as a nearly 150% increase in the production costs, a foreign reserve crisis, interruptions in power and energy supplies, and hike in the yarn price had decreased the competitiveness of the sector.
Shahjada Rubel, Momtex's head of business, said that their gas bill has climbed by 8.5% and their entire production costs have grown by more than 15%.
“A number of orders started shifting from China, but due to high production costs, we can't hold them. Now they are moving to Pakistan as production costs are lower there,” he added.
He also said that due to the reserve crunch, banks are discouraged to open LC which also impacts exports.
“The Russia-Ukraine war has shaped global consumer behaviour in a new way. Their buying capacity has curtailed as they are spending more on foods and other essentials due to inflationary pressure,” he added.
To combat inflationary pressures, purchasers' countries' banks are raising lending rates, which is influencing their consumers' behavior, he noted.
“In these circumstances, they need governmental support, especially in the uninterrupted supply of power and energy and allowing the import of yarn,” he added.
An official of Zaber and Zubair told Dhaka Tribune that the purchase orders are shifting to the competitors, especially Pakistan as buyers get their products at less than $0.30 per kg.
Mainly due to hike in gas-electricity and yarn prices, Bangladeshi manufacturers are lagging behind in the competition with foreign manufacturers, he added.
M Shahadat Hossain Sohel, chairman of the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, told the Dhaka Tribune that the cost of production per kg of towels increased by $0.45 after the hike in the gas prices.
“Moreover, the price of yarn has increased by 24% in the country though there is a shortage of orders in both knitwear and woven sectors. Due to increase in production price, the difference of the price of per kg items between Bangladesh and Pakistan is $0.35-$0.40 and for this reason, we can no longer compete with India-Pakistan,” he added.
He also said that there is good potential in home textile export and if the import of yarn is allowed under duty free facility, the competitiveness will increase to some extent and may ease the current dollar-crisis situation.
However, in the post-Covid period and since the start of the Russia-Ukraine war, global demand for home textiles declined drastically in the last two years, which subsequently impacted the country’s export.
In 2020, the global trade of home textile products was $122.90 billion, which decreased to $91 billion in the next year (2021) and in 2022, the volume of this trade further declined to $85 billion.
The Zaber and Zubair official said that throughout the pandemic, many stayed at home which affected the market for home textiles. However, once normalcy returned, individuals began to venture outside due to economic activity, which reduced demand and resulted in a large supply for purchasers.
Industry insiders also said that home textile is one of the first-line export sectors of the county, which includes bed linen, bed sheets, bath linen, carpets and rugs, blankets, kitchen linen, curtains, cushions and cushion cover, covers for quilts and other bedroom textiles.
Bangladesh entered the market of home textiles in the 1980s and now exports home textiles to 125 countries.
Although there are nearly 150 home textile producers in the country, currently 50-60 manufacturers are exporting actively.
