Guarantee disagreement stalls India –Bangladesh cotton deal

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Guarantee disagreement stalls India –Bangladesh cotton deal

The proposed cotton deal between India and Bangladesh has been stalled over difference of opinion in respect to providing guarantee by Bangladesh for mandatory import of cotton, sources said.

Dhaka proposed a negotiation with New Delhi for 1.5 million bales cotton a year should be exported to Bangladesh.

The two neighbors had also to sign MoU (memorandum of understanding) in this regard. During the negotiation, Bangladesh proposed that the ban on cotton will come into effect only after providing the decided ratio in MoU.

On the other hand India wanted guarantee that Bangladesh will import same quantity of cotton every year under any circumstances.

Neither the Bangladesh government nor the private sector approved the Indian proposal regarding the Trade Corporation of Bangladesh to buy cotton from Indian government to government (G to G) basis and supply it to local private millers. As a result MoU was not signed.

Indian Commerce secretary SR Rao requested Bangladesh delegation to inform him if they face any hurdle in trade.

Bangladesh requirement per year is 4.0 million bales of cotton, out of which 0.12 million bales are produced in Bangladesh. The country imports 0.9 million bales of cotton from India. Bangladesh imports 98 per cent of cotton from various countries. The other sources from where Bangladesh imports cotton are Africa, the USA, Australia, Pakistan and Commonwealth of Independent States.

The signing of MoU between India and Bangladesh came up after New Delhi slapped a ban on cotton export in March last year. A similar ban in April 2010 also raised global cotton prices mostly affecting Bangladesh’s textile industry, said Textile millers.

Following the Indian ban in March last year, Bangladesh at a bilateral commerce secretary level meeting in India discussed signing of MoU relating to cotton supply. A commerce ministry delegation also visited Uzbekistan to discuss another similar deal.