Decline In Cotton Yarn Exports To Bangladesh

India's cotton yarn exports to Bangladesh declined by three per cent during the first quarter of the current year despite the overall exports of cotton yarn increasing by more than 50 per cent, according to official sources.

Exports to Bangladesh between January and March this year dipped to Rs 182.83 crore against Rs 201.64 crore during the corresponding period last year.

In contrast, overall exports of cotton yarn has gone up to Rs 1567.85 crore during the first three months from Rs 1013. 9 crore during the same period last year.

We are checking up with the Indian High Commission in Bangladesh about it though we are yet to analyse the reason, the sources said.

The development has to be viewed seriously since Bangladesh is our largest importer of cotton yarn. We will also have to find out if they are supplanting it with imports from some other country, they said.

However, the industry does not seem to be unduly worried about the decline as exporters have made up for the fall with increased exports to the Far-Eastern region.

Exports to the rest of Asia has increased to 37.21 per cent during the first three months against 29.81 per cent shipped during the same period last year.

According to M.P. Gajaria, secretary-general, Indian Cotton Mills Federation (ICMF), the shift in exports towards the Far-Eastern countries was a good sign as problems had been persisting with yarn exports to Bangladesh.

One of the reasons for decline in exports to Bangladesh was related to the payments. Banks in Bangladesh were playing with the funds of master Letter of Credits opened with importers there and they were not parting with them, he said.

There were also problems with back-to-back Letter of Credits as some of the export-oriented mills were unable to comply with them as they did not get the required time, he said.

A demand has now emerged from the Far-East, and when we have easy access to them, it is a natural phenomenon to turn towards them, Gajaria said.

However, there was still significant exports to Bangladesh by merchant exporters who had stored the commodity in Calcutta. These exporters were in a better position to export to the neighbouring country, he said.

Official sources said the shift in exports was good in a way since India did not have to depend on a single market, and that too a fragile one like Bangladesh.

According to industry sources, the problem had also crept in due to withdrawal of preferential duty extended to Bangladesh by the European Union.

It means, Bangladesh can no more enjoy the advantage it got earlier, and this, in turn, has also affected Indian units which had opened back-to-back Letters of Credit with Bangladesh producers, the sources said.

The industry says that a major reason for the increase in exports to Far-Eastern countries like Hong Kong, Singapore, Taiwan and South Korea was that these countries, unlike India, were giving more thrust to value-added items like garments and fabrics.

With China having become a net importer of cotton and cotton yarn, there is a strong suspicion that Indian yarn is finding its way to China from Hong Kong, an industry source said.

Most of the yarn exported to Hong Kong is processed there before it is shipped to either South Korea or China, they said.

Industry sources said the problem of delay in movement of yarn at the Indo-Bangla border could also be another reason for the shift.

This has been a nagging problem with Bangladesh though efforts are being made now to sort it out, the sources added.

Bangladesh accounts for 20 per cent of cotton yarn exports from India. Textile goods comprise 78 per cent of Bangladesh exports, and the decline in yarn export from India to Bangladesh would have to be viewed in that context, the sources added.