Bangladesh Textile Mills Association Tuesday brushed aside allegations of artificially hiking the prices of yarn.

The trade body held a press conference after Bangladesh Knitwear Manufacturers and Exporters Association on Feb 13 accused local yarn producers of charging higher-than- international prices.

Speaking to reporters at BTMA's office, the association's president Abdul Hai Sarker said yarn prices depend on a number of factors.

"Yarn prices depend mainly on the prices of raw cotton on the international market. Factors such as production costs and demand and supply also influence prices," he explained.

The prices of raw cotton on the international market have increased, Sarker said, adding: "Cotton prices have increased by 30 percent to 35 percent in the last three months, whereas yarn prices have gone up only up to 8 percent in the same period," he added. Sarker also highlighted other hindrances to the growth of the industry and criticised the National Board of Revenue's plan to give tax breaks to only those who manufacture fabrics.

"This means cotton or yarn—although important components of the textile industry—will be left out." He said the decision would hurt the textiles industry leading to slowing investments and shutdown of several allied factories.

"I think that the government should revise the definition of textiles and prolong the tax holiday to encourage more and more investments," he said. Sarker stressed the need for tax breaks for the industry.

"Other areas of the industry such as spinning, weaving, knitting and dyeing and yarn are now enjoying tax breaks which expire next June. These backward linkage industries have greatly contributed the growth of readymade garments industry." More investments are needed to help the backward-linkage industries grow, Sarker said.

BTMA also urged the government to allow producers for local markets to import capital machinery tax-free like exporters, according to a written statement by the trade body. Speakers said 'waste cotton' is being exported to India only to come back mixed in raw cotton as import.

They asked the government to stop the trade and said the 'waste cotton' can be used in local production. Waste cotton can be used to produce denim, according to business leaders.