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Flip-flop Indian cotton export policy annoys B'desh

Mar '12
The recent sudden imposition of ban on cotton exports by India, and the subsequent partial rollback of the same a week later, will impact the production and export of Bangladesh's textile and readymade garment sectors.

India is the second-largest exporter of cotton in the world and Bangladesh meets nearly 45 percent of its cotton needs by importing Indian cotton.

As a result of ban on cotton exports imposed by the Indian Government, Bangladesh would need to source the 45 percent of its cotton requirement from other countries, which would result in an increase in prices of imported cotton, which would, in turn, affect the competitiveness of Bangladesh's yarn, fabric and readymade garment sectors.

Speaking to fibre2fashion, Mr. Showkat Aziz Russell, Vice President of Bangladesh Textile Mills Association (BTMA) said, “The ban imposed by India on cotton exports has created some panic among the spinning mill owners in Bangladesh.”

“The mill owners started procuring cotton from other countries when the ban was announced. They imported cotton from Australia, Uzbekistan and the US. Personally, I bought about 10,000 tons, out of which half could have been from India, but they lost this sale because of the ban. Simultaneously, Indian cotton lost the demand as mill owners are now buying cotton from other countries,” he adds.

Explaining the decline in demand for Indian cotton, he says, “Last year, we placed orders for cotton from India, which was not delivered, in spite of export being open. This forced us to buy from other countries. Previously, we were buying 100 percent of our cotton requirement from India, but now we buy only 30 to 60 percent from India as there is high volatility in cotton prices and there is frequent change in Government export policy. Last year, even those who had got Letter of Credit (L/C) were not allowed to import cotton from India.”

Mr. Russell lays emphasis on market dynamics. He says, “To resolve this issue we need to act according to market dynamics - if the demand is high the price goes up; if the demand is less the price is likely to go down. If we practice our business within the demand and supply norm then both the countries will benefit. Everything works based on the demand and supply basis.”

Concluding on an optimistic note, he says, “I believe, the Indian textile sector and the Bangladeshi textile sector need to form a strategy together. On behalf of Bangladesh, as Vice President of the BTMA, I would like to welcome the Indian side to formulate a strategy for a win-win situation.”

Fibre2fashion News Desk - India

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