Value addition in readymade garment exports of Bangladesh have dropped to 51 per cent in the first quarter of the current financial year. The sector had enjoyed a 64 per cent value addition during the first quarter of the last fiscal. The fall is mainly because of a rise in raw material import cost, especially yarn, which has almost doubled in price but buyers had not increased product prices in line with that.
Exporters are worried about value addition in the next quarter and the business scenario as almost every manufacturer is running their factory at reduced capacity, resulting in increased overheads. If they can run factories at full capacity that may help to regain the value addition as cotton prices come down. Where they would barely make a one dollar profit on a dozen T-shirts, now they have to pay an additional dollar as diesel cost, which hurts profits further.
The industry is passing through a challenging time due to the ongoing Russia- Ukraine war. If they export the same value as last year, the overall industry export growth might be negative as they have to export a higher quantity of products to reach last year's value.