US-based Cargill India seeks to set up bonded warehouses in BD

Cargill India, a US-based company, has sought permission to establish bonded warehouses in Bangladesh's customs zones to import cotton with duty-free facilities, sources say.

It has also requested to allow the export of surplus cotton to other countries after meeting local demand.

The company recently made the request to the Bangladesh embassy in Washington in a letter. The embassy forwarded the letter to the National Board of Revenue (NBR) and requested to take necessary steps in this connection.

When contacted, senior officials of the commerce ministry and NBR said they have received the proposal and are scrutinising it, adding it will take time to make a decision.

Cargill is a 160-year-old family-owned company based in Minneapolis, Minnesota. It operates in 70 countries and sells products in 125 markets globally. It sells food, food ingredients, and animal nutrition products to nourish the world in a safe, responsible, and sustainable way. The company has been doing business in Bangladesh since 1974.

"We are one of the major exporters of high-quality US cotton to Bangladesh. However, it takes over 100 days to ship cotton to customers in Bangladesh from the day the order is placed," Dhritiman Biswas, the company's director of government relations for South Asia, said in the letter.

"In view of the highly volatile external environment, we humbly request that building bonded warehouses to store cotton be permitted before customs clearance in ports. Companies can pay monthly rent as per fixed charges to the government/private firms for using the warehouses," he said.

Biswas believes this will have major positive impacts on Bangladesh's trade and economy.

Local importers and the textile industry will be able to access high-quality US cotton within hours/days of making a request after opening letters of credit (LC), according to the letter.

The letter also said fast encashment of LCs (as raw materials are immediately available for clearance) will reduce LC days, which will be beneficial to Bangladesh's banking system.

Biswas expressed hope that the bonded warehouses will take the Bangladesh-US bilateral trade to new heights and may also reduce the negative trade balance between the countries.

In 2023, US exports to Bangladesh were $2.3 billion and imports $8.3 billion.

Bangladesh currently is highly reliant on imports because of its low domestic production of cotton, which amounts to around 1.5 lakh bales annually.

According to the United States Department of Agriculture's (USDA) Foreign Agriculture Services, Bangladesh is the fifth-largest export market for US cotton, with export value exceeding $339 million in 2023.

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