Textile millers moving away from Indian cotton

Import of cotton from India, once the main sourcing destination for Bangladesh's textile millers, dipped further last year as locals are increasingly moving to suppliers in North and West African countries to cut reliance on the neighbouring country.

In 2019, 18 per cent of the cotton imported by Bangladesh came from the neighbouring country, according to data from the Bangladesh Textile Mills Association (BTMA). A year earlier, it was 26 per cent.

Last year, Bangladesh, the largest importer of cotton in the world, met 41 per cent of its requirement for the white fibre from East and West African countries.

The local spinners and importers have been diversifying sourcing -- and cutting reliance on India -- mainly for a price advantage, followed by quality shipment.

"Quality shipment means quality, timely shipment and commitment," said Mehdi Ali, president of the Bangladesh Cotton Association, adding that contamination is a big problem in Indian cotton.

The low quality of the Indian cotton is the main reason behind the falling imports from the neighbouring country, said Monsoor Ahmed, secretary of the BTMA.

A section of Indian cotton traders also doesn't maintain timely shipment and deliver the right quantity as per agreements, he said.

For example, it is written in the letters of credit that there maybe 3 to 4 per cent less cotton than the amount agreed upon when the imported fibre is weighed in Bangladesh.

But in many cases, it is 10 to 15 per cent less, he said. 

"The concentration of moisture in Indian cotton is higher and this makes it difficult to store them in the warehouses for a long time."

Sometimes, according to Mansur, Indian exporters stop supplying without any notice.

As a result, more than $8 billion worth primary textile sector in Bangladesh has to suffer a lot. Such uncertainties emerged several times in the past, he said.

"So, local importers are not relying too much on a single country. Rather, they have diversified sourcing destinations in the last few years," Ahmed said.

Since the cotton prices of India, the largest producer of the raw material worldwide, are almost the same relative to other countries, the importers are looking for sellers in Western and Eastern African countries, said Razeeb Haider, managing director of Outpace Spinning Mills in Shreepur.

"This is because the spinners and importers are getting better quality cotton at the same prices."

But because of the coronavirus pandemic, the price of Indian cotton has declined.

"So, there might be an increase of demand for the raw material from the country," he added.

In the international markets, Indian cotton sells for 62 cents per pound compared with 68 cents in other countries.

"So, if India can minimise its contamination problem, it could be in a better position," Ali said, adding that Bangladeshi importers are not enjoying any extra benefits from any origin.

Last year, more than 12 per cent of the cotton came from the Commonwealth of Independent States countries, nearly 12 per cent from the US, 5 per cent from Australia and 10 per cent from the rest of the world.

Brazil, the US and Australia are progressively becoming popular sources for local cotton importers and spinners, too.

Bangladesh produces 1.65 lakh bales to 1.70 lakh bales of cotton a year, which is less than 3 per cent of the annual demand for 10 million bales.