"The importers increased yarn prices by Tk 500 per kg one month ago showing a cause that a 15 percent VAT may be imposed in the next budget. Some small factories have already been closed following the price hike and 60 percent of the industries are on the verge of closure," said Md Merajul Alam, president of the association.

Thousands of workers will become jobless and the owners will not be able to run the factories if fresh taxes are imposed, the BSIOA leaders feared.

They demanded immediate action against the importers who increased yarn prices, placing a five-point demand at a press conference held here on Wednesday.

The five-point demands also include immediate formulation of a silk policy, discouraging import of readymade silk garments and government control over yarn prices.

Manzur Faruk Chowdhury, general secretary of the association, AK Ghulam Quadir, senior vice-president, and Abu Bakkar Siddik, an affected businessman, also spoke at the press conference.

Some 300 tonnes of silk yarn is imported annually to meet the demand of more than 500 industries that mainly depend on imported raw materials. Local silk production is roughly 50 tonnes a year, the leaders told the press briefing.

The government started working on a silk policy in 2002, but the policy is yet to see light.