The country sources nearly half (46 percent) of its cotton from abroad. Bales of cotton are used by local yarn makers to produce the thread used by apparel exporters. So when Indian suppliers suddenly stop shipment of 400,000 bales of cotton because there is a hike in the Indian domestic market, our producers are left in the lurch. There is a chain effect on prices domestically due to such a sudden halting of import from one of the biggest producers of the fibre. Indeed, local yarn prices have apparently gone up by 15 percent since there is a dearth of the raw material and although there are other big players in the international market like the US, it will take a while to negotiate terms of purchase and price before a supply of the fibre can become available to local manufacturers.
The fact that Indian suppliers have signed contracts to supply cotton to the Bangladeshi parties and are now refusing to honour them is a breach of contract. This is an incident which may dent the business relationship between our dealers and their counterparts in India. This intentional supply crunch will undoubtedly put some RMG exporters in a tight spot. This incident has had one positive impact and that is the realisation that we cannot be dependent on one supplier of this basic material. Diversification of supplies from different countries will give our yarn producers and knitwear manufacturers the choice of keeping this essential fibre coming into the country without let or hindrance.
