Kg To Pounds Conversion

Spinners thrown in a spin

Islam, who would not disclose his full identity fearing it would affect his loan eligibility, is the owner of one of the giants in textiles, and was expecting a good profitable year until things started tumbling a few months back.

He now stares at a $70 million loss as India and China have started supplying cheap yarn. For Islam this comes on top of an acute gas crisis.

Most spinners like him are on a spin today. For them it was a double whammy -- only at the end of last year they had a nightmarish experience with cotton price spiralling out, and now this glut of cheap imported yarn.

To make their woes worse, the European Union has offered in January this year generalised system of preference (GSP) with single-step conversion, which means a garment exporter will get duty-free export facility if he now just imports fabric and makes apparel. Earlier he had to go through a two-step conversion -- he had to import yarn to turn it into fabric and then into apparel. When this was the system, garment exporters found that use of local yarn was better as they could then get duty-free export facility.

With the offer of single-step GSP, garment exporters are importing cheap yarn from India and China. It makes sense for them. Because why should they bother about costly local yarn, exposing once again the frail planning and the status of competitiveness of our spinning industry that has grown to a Tk 40,000 crore investment today with the help of 25 percent cash incentive on exports, and two-step GSP facility.

And so the spinning industry has grown to a stage when it can fully support "general category" exportable knitwear's requirement for about 2 lakh metric ton of yarn.

The woe of the spinners began at the end of 2010 when the international cotton market suddenly started heating up. While a pound of cotton sold for 60-70 cents in October-November, it hit $1.75 a pound in January 2011 and pushed further up to $2.5 in March.

The spinners suddenly found all their projections going haywire. The loans they were allowed by their financiers to buy cotton before the price hike, could now buy them even less than half their requirement.

Another parallel development started taking place around that time. India slapped an export restriction on cotton in November-December, allowing exports on limited quota only. This helped India stabilise its internal cotton market but not at the cost of farmers. It offered a 300 rupee higher support price for every quintal of cotton to farmers. Thus with its clever policy, India satisfied both the farmers and the industry.

The Guide: How to kg to pounds

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