India still remains a 'preferred' source of cotton for Bangladesh

Bangladesh's spinners and traders still prefer India as a key destination in importing cotton and yarn due to factors like proximity, lower transportation costs and easy availability of essential raw material, industry insiders have said.

Because of such advantages, they usually import larger volume of cotton from the neighboring India, according to them.

Data, compiled by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) based on central bank figures, revealed that Bangladesh imported 19.40 per cent of its required raw cotton worth of US$ 684 million from India in the fiscal year of 2023-24.

Bangladesh imported US$ 3.52 billion worth of cotton --carded and combed-- in the fiscal year 2023-24, according to the available data.

Brazil remained the country's second-highest destination for cotton import with 16.11 per cent share in the FY '24, followed by Benin 12.03 per cent and USA 10.12 per cent.

Bangladesh imported $ 568 million worth of cotton from Brazil, $ 424 million from Benin and $ 357 million from the USA in FY'24 respectively.

Around 8.0 per cent of the imported cotton came from Burkina Faso, about 7.80 per cent from Australia, 7.01 per cent from Mali and 6.94 per cent from Cameroon in the said fiscal.

Bangladesh also imported cotton valued at $ 4.0 million and US$2.0 million from China and Pakistan respectively, according to data.

However, textile millers and garment exporters predicted that the volume of cotton import from the USA would rise significantly as the Trump administration recently announced that Bangladeshi made RMG would enjoy conditional duty waiver for using at least 20 per cent of American raw materials like cotton.

BGMEA president Mahmud Hasan Khan said Bangladesh imports the majority of its required cotton from India.

Due to the US's latest conditional duty waiver on use of at least 20 per cent American cotton to produce exportable garments for that country might reduce cotton import from other countries as local exporters are expected to enhance their sourcing from America to enjoy such benefit.

Initially, imports would decrease sources from Brazil, which will be followed by Australia, India and then African countries, he added.

Talking to the FE, Managing Director of Ha-meem Group AK Azad said they import cotton mostly from India, Brazil and Africa.

Now Bangladesh's cotton import from the USA would increase since the announcement of duty benefit, he added.

He, however, observed that though the US cotton is comparatively costly, its quality is good as it has low wastage rate.

He said his company needs organic cotton, and Bangladesh mostly imports it from India as other countries are unable to supply the same, said the MD of Ha-meem group, one of the largest exporters to the US market.

When asked, Sayeed Ahmad Chowdhury, Director at Square Denim, said his company imports up to 30 per cent of its required raw cotton from India due to the advantages of lower cost and fast shipments.

He also said previously, they were fully dependent on India for organic cotton and now they import such items from Turkey also.

Mr Chowdhury, however, said though the quality of US cotton is better than that of other countries in respect of its colour, whiteness and less wastage rate, they can't use American cotton in some woven items because of its 'fibre limitation'.

Echoing the same tone, Abdullah Hil Nakib, Deputy Managing Director of Team Group, said they import cotton from China and India for producing yarn and fabric and exportable finished garment items.

He, however, said clarification is necessary regarding the extent of duty waiver to be applicable in exporting apparel products to the US market.

He also hinted that the use of American cotton would increase in the days ahead.

Apart from cotton, Bangladesh's apparel makers prefer using Indian yarns due to higher prices of locally produced ones, cut in incentive.

Poor gas supply hampers local yarn production, thus raising its cost of manufacturing , local textile millers argued, saying that India exports yarn to Bangladesh at dumping rates.

Talking to the FE, former Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Fazlul Hoque said yarn imports increased mostly from India due to higher of local-produced item.

The average price gap between the local and imported combed yarns widened up to 40 cents per kg, he said, adding that apparel makers, having more capabilities including large storage facilities and long lead time, prefer imported yarn.

Besides, the rate of incentive, which earlier encouraged RMG exporters to source yarn from the local market, has been reduced by the government, he mentioned.

According to USITC data, Bangladesh imported US$2.9 billion worth of yarn in 2023.

In 2023, about 56 per cent or US$1.6 billion worth of total cotton were imported for producing yarn and India cotton accounted for more than three-quarters (77.2 per cent) of the imports.

Following the rise in yarn import, the government has suspended yarn import through land ports a few months back following appeals from the local millers.

Munni_fe@yahoo.com