India, Bangladesh to sign pact on cotton shipments



India and Bangladesh may shortly seal an agreement on cotton that will ensure supply of a fixed minimum quantity from New Delhi to its neighbour every year irrespective of any export ban.

“Bangladesh wants India to commit to 15 lakh bales (170 kg each) of cotton every year, but the final amount is still being negotiated,” Bangladesh Commerce Minister Ghulam Muhammed Quader told Business Line.

The deal, which will be at a business-to-business level, is being worked out by the Commerce and Textile Ministries of the two countries.

For India, the Cotton Corporation of India will sign the final agreement, an Indian Commerce Department official said.

The price, which will be flexible, is likely to be marked slightly higher than the existing global prices as a premium for the guaranteed supply, the Indian official added.

The premium amount is also being finalised.

“We hope that within the next few months the deal will be through. It will protect textile manufacturers in our country from uncertainties that India’s frequent ban on cotton exports creates,” said a Bangladeshi Government official, who did not wish to be named.

The supply agreement will ensure that even if India imposes a ban on cotton exports at some point of time during the year, it will be obligated to sell at least the committed quantity.

“For instance, if it takes a commitment for 15 lakh bales and has supplied 10 lakh bales at the time a ban on cotton exports is imposed, it will have to sell the balance 5 lakh bales to the country during the year,” the Bangladeshi official explained.

India had imposed a ban on cotton exports last March and had stopped exports of even cotton that had been contracted for.

This had led to protests from not just cotton exporters but also cotton buying countries including Pakistan and Bangladesh.

The Government later relaxed the ban and started fresh registration for exports.

Source: Business Line