The apparel export sector in Bangladesh is growing with the demand of raw materials like fibre and cotton. The country has been meeting this demand by importing raw materials from India, which is the world’s second-largest grower of cotton and Central Asia. Such huge has been the demand that in 2014/15 season Bangladesh surpassed China to become India’s top buyer of the fibre. A recent Intercontinental Exchange (ICE) report has claimed that Bangladesh is expected to outshine China as the world’s largest importer of cotton this financial year. Moreover, the country’s need for raw cotton will almost be double in next 6 years as it has targeted to achieve apparel export of US $ 50 billion by 2021.
In the year 2014, the total amount of cotton imported by Bangladesh was 4.5 million bales and it will require 9.0 million bales by 2021 to meet its target. Apart from the need to meet the export target, reasons for the mounting demand of cotton in Bangladesh are many, the domestic requirement of cotton products is high, and there is continuous increase of spinning mills whereas the cotton production within the country is limited.
Raw material procurement
Bangladesh imports 40 per cent of its total cotton requirement from India, 20-22 per cent from Central Asia and in 2014, the fibre consumption in Bangladesh was majorly of raw cotton, which was 979000 tons or 94 per cent of the total expenditure. Consumption of Polyester Staple Fibre was 54000 tons (4 per cent) while Viscose Staple Fibre was only 19000 tons (1 per cent).
Likewise in 2006, there were 263 spinning mills in the country with the spindle capacity of 5.62 million which in 2015 has grown to 430 spinning mills and 10.65 million spindles. It is projected that by 2021, Bangladesh will have 600 spinning mills with 16.50 million of spindles. Furthermore, the raw cotton consumption that was 2.10 million bales in 2006 is now expected to reach 7.50 million bales in 2021. Hence, the requirement for the cotton has been rising in the country and India is set to play a pivotal role in the supply of the raw cotton to Bangladesh.
Though the production of cotton in Bangladesh is matter of concern, yet it has the capacity to increase its present output from 0.15 million bales to 1 million bales by 2021. And this objective can be realised by expanding farming areas to 0.1 million hectares of land that includes non-conventional areas like hills and char areas (new land caused by soil erosion and deposition).
Underlying issues
There are some issues too that need to be addressed like world cotton prices falling significantly in 2014/15, which may have impact on the world’s cotton production by 9 per cent to 23.8 million tons, mainly due to reduction in the area. In Indian context, after declining 48 per cent in 2014/15, exports may recover 34 per cent to 1.2 million tons.
However, in relation to Bangladesh and India’s cotton business, the Bangladesh- India-Bhutan-Nepal (BIBN) and Land Boundary Agreement (LBA) between both the countries is a positive development and can act as a catalyst for the growth of cotton industry in the region. This move will also help in the evolution of quicker and better services that in turn will accelerate the growth of cotton industry.
Need for a progressive approach
The importers in Bangladesh get short staple cotton for denim from India and African countries, while long staple cotton from Central Asia. And cotton being one of the essential natural fibres of Bangladesh that forms 75% of the total textile value added needs special attention, and government support to prosper. A serious initiative to explore and chalk out a strategy to discover new cotton production areas and efficacy of the plan will definitely aid in the growth of the vertical. Also, a proper research and effective implementation of project will lay a strong foundation.
In order to keep the things in perspective, Bangladeshi institutional bodies also need to work on finding better solution and resolve disputes if they arise. The Bangladesh Cotton Association (BCA) & International Cotton Agency Limited(ICAL) can also work together to inculcate trust and confidence amongst the businessmen from both the countries and this will aid in avoiding problems, and ensure effective implementation of cooperative measures, which will help paint a rosy picture for both the trade and the traders.
