he millers, who are facing a huge high-cost stockpile, say an increased cash incentive will encourage the garment exporters to buy local fabrics and yarn at higher prices.
Muhith did not mention how much the incentive will be raised but the sector leaders demanded 15 percent cash benefit, up from 5 percent now.
The minister is expected to sit with other ministers and stakeholders in a meeting after the Eid festival to solve the crisis in the primary textile sector.
“The millers have invested a lot of money in the textile sector as we have encouraged them to strengthen the backward linkage industries. But they are now in trouble,” he said.
Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA), said the stockpile of unsold yarn at different spinning mills reached 2.5 lakh tonnes worth Tk 9,000 crore.
Export orders worth Tk 2,000 crore have shifted away from Bangladesh to other countries as domestic textile millers failed to sell the products at lower prices, Alamin said.
Muhith sat with the leaders of BTMA, Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association at his secretariat office yesterday.
The primary textile sector is going through a troubled time as sales of yarn and fabrics declined when the Bangladeshi millers imported cotton at higher prices from an extremely manipulated international market, the minister said.
“It's a manipulation and a kind of dumping. Our competing countries give more incentives to their textile millers to make them strong,” he said.
Muhith said he will also help the affected millers in converting their default loan to term loans and will help businessmen in negotiations to resolve any dispute over forward purchases of cotton.
Many cotton importers may not be able to pay the bank loans in time, as the sales and prices of the products dropped significantly on the local market, he added.
The minister also said he will lower the duty on import of polyester and viscose, two manmade fibres, to reduce dependency on raw cotton.
The country's backward linkage industry slipped into trouble when the European Union relaxed the rules of origin under its generalised system of preferences from January.
Due to the EU's latest move, garment exporters are getting 12.5 percent duty benefits from the EU even from imported fabrics.