Fwd: [bangla-vision] Indian ban on cotton exports will hurt local textile industry

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From: Isha Khan <bdmailer@gmail.com>
Date: Sun, Mar 11, 2012 at 1:45 PM
Subject: [bangla-vision] Indian ban on cotton exports will hurt local textile industry
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Indian ban on cotton exports will hurt local textile industry

 

Bangladeshi spinners and garments manufacturers are poised to face a big setback as India has imposed a ban on the export of its cotton to outside buyers for the benefit of Indian textile industry. The action will not only adversely impact Bangladesh textile industry, Indian cotton growers will also face a slide in the market price since a sudden closure of external markets would virtually hand them over to the local market monopoly and deprive them of their legitimate price, Indian media reports said last Tuesday.

Based on the Indian Commerce Ministry order to ban the export, Indian suppliers of cotton to Bangladesh has been asked to cancel the L/Cs already opened against export orders, the industry sources here said. 
Moreover, shipment already loaded in trucks and on the move have also been halted ignoring that the order can't be imposed on goods already consigned to Bangladeshi buyers. It is a total chaos, they sources said.
Meanwhile, Indian Prime Minister Dr Manmohan Singh has ordered a review of the ban on cotton export as it has created many complexities not only at the importers end but also in the Indian domestic market,  especially causing cotton growers a severe financial loss which may come from export ban.

Facing election, his government can't afford to sustain the adverse impact of such a decision. The Indian Prime Minister reportedly asked the concerned ministries to sit immediately on Friday to make a total appraisal of the entire situation.
 
Meanwhile, Bangladesh spinners will is facing yet another blow because of the sudden ban on Indian cotton exports as Bangladesh is one of the major consumers of Indian raw cotton, businessmen said. The Indian government last week imposed the ban mainly to build up its domestic stock amid fears of a low cotton yield this year due to unfavourable weather. India is the world's second largest cotton producer and Bangladesh imports 35 percent of its total consumption from India annually.

The monthly cotton consumption in Bangladesh is 60,000 tonnes, the industry sources said. According to media reports, the Indian decision has also affected the prices in the international markets. 
The prices, which were at 90-91 cents per pound even a few days back, jumped by 3.33 percent in the New York futures trading Tuesday.

India slapped the ban for the first time this year, while temporary bans have been imposed several times over the last two years. The Indian decision will definitely delay production at garment factories in the country as the spinners will have to look for alternative sources of cotton far away places.  India is an easy option, it takes shorter lead-time compared with other cotton producing countries," the source said. The Indian decision will further endanger the spinning sub-sector, which was just turning around from last year's price shocks stemming from the international market, he said.

The Bangladeshi spinners are still burdened with the unsold stockpile of yarn, churned out from costly cotton last year. The spinners bought cotton at higher prices, mostly at $2.35 per pound, from the volatile world market last year. But, the price came down suddenly with a fall in prices of yarn worldwide. "Probably India wants to sell yarn to Bangladesh at higher prices, adding more value by processing the raw cotton," he added.

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