About half of the total 450 grey and finished industries have already been shut down in the last six months as low cost Chinese products are flooding the local market, they mentioned.

Leaders of Bangladesh Grey & Finished Fabric Mills and Exporters Association (BGFFMEA) met the chairman of the National Board of Revenue at the NBR conference room in Dhaka to explain the present situation of local industries, urging him to check under-invoicing in import of China fabrics.

Speaking at the meeting, Harun-ur-Rashid, president of BGFFMEA, explained a section of dishonest traders is importing Chinese clothes at 40 to 50 cents whereas the genuine price of such fabric is $2.5 to $3 per metre.

"It is obvious that the rest of the money is sent abroad through hundi or other illegal ways," he added.

The government is losing substantial amount of taxes due to import through under-invoicing, he said adding that it is possible to increase revenue from fabric import four to five times more than the present level if the NBR can check such illegal import.

Referring to Bangladesh Bank (BB) statistics, Rashid said fabric import from China amounted to Tk 1,273 crore in the first six months of 2004-05 fiscal year, up by 65 percent than the previous fiscal's same period. Bangladeshi traders imported Chinese fabrics worth Tk 1,538 crore in the 2003-2004 financial year.

He, however, admitted that the production cost of local fabrics is around 20 to 25 percent higher than those of other countries as exporting countries give subsidy and duty on raw materials import in Bangladesh is higher.

Local grey and fabric manufacturers are facing severe problems in selling their products and around two crore meters of grey and finished fabrics have been stockpiled in their warehouses, he said.

Shah Rezaul Mahmud, secretary of the association, said grey and finished fabric producers meet 35 percent of the total demand of the export-oriented readymade garment sector.

He urged the NBR to impose duty on imported fabrics as per their weight.

Responding to the BGFFMEA leaders, NBR Chairman Khairuzzaman Chowdhury admitted under-invoicing as well as fake declaration in importing cloths from abroad has increased in the recent times.

Duty on imported fabrics is substantial, he said assuring the leaders of taking all possible steps to save local industries.

About forming a taskforce to monitor fabric import, the NBR chairman said pre-shipment inspection (PSI) companies are tasked with solving these types of problems but they have failed to perform their duties and check tax evasion.

As the local fabrics are facing serious problems to compete with the illegally imported cloths, Chowdhury said the NBR will take initiative for extensive physical inspection in case of imported textile fabrics.

These 450 grey and finished fabric manufacturers can produce 40 crore metres of cloths annually at their plants where two lakh workers are involved.