Bangladesh is still lagging behind competitors in the production of recycled yarn although the market for such yarn is swelling, especially in tune with new environmental laws being formulated by the European Union (EU).

Recycled yarn is manufactured from worn-out or scrap textiles, furniture and clothing or other materials like plastic bottles.

Though much of the recycling processes are patented, the basic concept involves creating pulp or fibres and turning those into yarn. Sometimes virgin cotton is also added to the mix.

Use of apparel made from recycled yarn has been growing globally as consumers' behaviour is changing centring the need for protecting the environment and slowing down climate change.

This has been further propagated by fast fashion -- the inexpensive clothing produced rapidly by mass-market retailers in response to the latest trends -- which inevitably leads to substantial carbon emissions and consumption of water.

Prompted by consumer behaviour, the EU has already moved towards formulating a new due diligence law for the sourcing of garments made from recycled yarn.

The trade bloc has already announced that by 2030, all of its garment items would have to be sourced from recycled yarn.

As a part of the new rules, Swedish retail giant H&M has a target to have 24 percent of its apparel sourced from recycled or sustainable materials by 2025.

Globally, annual sales of recycled yarn are projected to grow from $4,553.4 million in 2023 to $5,500.7 million by 2029 at a compound annual growth rate of 3.2 percent, according to QY, a California-based global research organisation.

China accounts for about 60 percent of the trade followed by the US with a share of about 16 percent, it said.

Currently, there are only three local mills in Bangladesh manufacturing recycled yarn for export. Set up with an investment of around $30 million, they can produce nearly 40 tonnes of recycled yarn per day.

Another 60 tonnes of recycled yarn are produced by some mills but those are used for products meant for the domestic market, such as mattresses and curtains, according to industry insiders.

There are also some mills producing fibres for export.

While cotton yarn can cost $3 to $3.5 per kilogramme in the international market, recycled yarn can fetch as much as $1.5 to $2.5.

Four more projects are under construction with an investment of $40 million and are set to come into production within the next one year. They are expected to take the daily output of exportable recycled yarn to 100 tonnes, they said.

Setting up a full-fledged factory requires an investment of around $10 million. This along with a lack of technological knowhow and skilled manpower are major factors behind investment coming about at a very slow pace, they added.

This also prompts domestic textile mills to mainly focus on cotton yarn.

"I have been producing a very little amount of virgin cotton-mixed recycled yarn for the requirement in my garment factories," said AK Azad, chairman and chief executive officer of Ha-Meem Group, a leading garment exporter.

A dedicated recycled yarn mill of the group at Maona in Gazipur will go into production within the next six months to produce 40 tonnes of denim yarn per day, Azad told The Daily Star over the phone.

Currently, many mills are producing yarn from recycled materials, said Md Zahurul Islam, managing director of Bhaluka-based recycled yarn producing mill Saraz Fibre-Tech Ltd.

However, their composition is mixed, such as, 30 percent virgin cotton and 70 percent wastage of garment, which is locally known as "jhoot".

The value addition in the manufacture of recycled yarn can reach almost "300 percent" as otherwise the materials would have ended up in landfills, Islam said.

Annually, Bangladesh produces 4 lakh tonnes of textile wastage, of which 5 percent is locally recycled.

A major portion of the remaining wastage is exported or turned into fibre and a few tonnes end up in landfills.

If 30 percent of the waste could be recycled, it could save on the import of $1 billion of virgin cotton, according to local millers.

Recently the prices of yarn made from recycled materials declined because of a fall in demand from international retailers and brands amid the Russia-Ukraine war, said Md Abdur Rouf, executive director of Bhaluka-based Simco Spinning and Textile Ltd.

A 7.5 percent VAT on procurement and 15 percent VAT on sale of such yarn has been hindering investment in this sector, said Mohammad Ali Khokon, president of Bangladesh Textile Mills Association.

The government should formulate policy in this regard soon, he added.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has already started engaging in collaborations with research teams of different EU countries to develop recycled yarn, said BGMEA President Faruque Hassan.

Future business will depend on this type of yarn and by 2030, Bangladesh will hopefully be a hub for recycled yarn, he added.