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India plans to raise its cotton export to Bangladesh aiming to reduce its bulging reserves following a decrease in demand from textile mills there.
According to a Hindustan Times report published on Tuesday, the Cotton Corporation of India may send 1.5 million to 2.0 million bales of fibre to Bangladesh before the new crop begins arriving in October.
The state-owned corporation usually sells cotton to local mills and traders at market prices, after buying from farmers at government-set minimum rates, Pradeep Kumar Agarwal, chairman of the Corporation, told Bloomberg.
"In any case, I can assure that it won't be lower than domestic prices which have fallen about 20 per cent since the outbreak of the coronavirus," Mr Agarwal was quoted as saying.
Export prices will be decided by the two governments using the Cotlook index, Mr Agarwal told the news agency.
Industry researcher Cotlook Ltd.'s benchmark is a daily average of the five cheapest cash prices in the world.
According to the report, Indian Cotton Corporation plans to sell 500,000-700,000 bales of 170 kilograms each to Trading Corporation of Bangladesh TCB) in the marketing year ending on September 30.
The rest of the quantity will be shipped in 2020-21, Mr Agarwal told the news agency in a phone interview.
Bangladesh vies with China as the world's biggest buyer of cotton.
Contacted, Atiqur Rahman, Managing Director of Rahman Knit Garments Limited, told the FE that Bangladesh imports around 25 per cent of cotton in recent years.
"If local mills can buy cotton from the nearest source at an affordable price, it will be beneficial for the country," said Mr Rahman.
He also said Bangladesh imports the fibre from West Africa, CIS (Commonwealth of Independent States), the US and Australia.