India has planned to export 1.5-2 million bales of surplus cotton to Bangladesh to clear their stock before harvesting of the new crop begins in October, a move industry people fear may dump low-quality fibre to Bangladesh.
Sources said the Indian government intends to export it on the government-to-government (G2G) basis, instead of the business-to-business (B2B), an unprecedented approach in this regard that may go against the interest of Bangladeshi textile industries.
Textile leaders said the world's biggest cotton buyer, China, has already stopped import of the item from India due to political tensions over the border issue.
Besides, India's domestic consumption has fallen by about 20 percent due to the Covid-19 pandemic, according to the Bloomberg.
Furthermore, the country has additionally cultivated cotton in about 0.5 million acres of land compared to the total last year, according to the Indian agriculture ministry.
Meanwhile, the pandemic may lead to a fall in global cotton consumption by about 15 percent this year, projected by the United States Department of Agriculture, while the item's global prices have already dropped by about eight percent.
State-owned Cotton Corporation of India (CCI) wants to sell 500,000-700,000 bales of cotton (170kg each) to its Bangladeshi business counterpart Trading Corporation of Bangladesh (TCB) in the current marketing year ending on September 30.
The rest of the amount will be shipped in the next marketing year, said a Bloomberg report quoting CCI Chairman Pradeep Kumar Agarwal.
Usually, Bangladesh imports cotton from different countries on the B2B contract to ensure quality of the fibre.
"If Indian cotton is imported by the state-owned TCB, it may create a scope of dumping low-quality fibre in the country because the government agency does not have any such experience," said Matin Chowdhury, former president of Bangladesh Textile Mills Association (BTMA).
If low-quality cotton is imported, it will destroy the global reputation of the country's textile industry, he said, adding, "I never saw the TCB importing cotton in the last 30 years."
Echoing Matin Chowdhury, BTMA President Mohamad Ali Khokon said India is not a trusted business partner as they do not honour their trade commitments.
Whenever they start getting better market prices for their products, they cancel export orders, he said, alleging that Bangladeshi textile millers had similar experiences in 2010.
"Now they [India] are in trouble with a surplus quantity of cotton which is why they want to sell it to Bangladesh. But when the market will begin recovering or create a demand in the domestic market, they might cancel our bookings," Khokon also said.
"Most of our millers want to buy cotton from India, if they ensure quality of the fibre."
He also alleged that the CCI always offers a price at least 3-4 cents higher than the market rate, and they do not give a contamination-free guarantee either.
The India's state-owned agency buys cotton from their farmers at the government-set prices.
This year, the CCI purchased cotton from farmers at a government-fixed price of 5,500 rupees ($74) per 100kg whereas the present market rates are between 4,800 rupees and 5,000 rupees, according to the Bloomberg report.
The CCI purchased 10.5 million bales of cotton this year, the highest-ever procurement by the organisation. To protect their local farmers during the pandemic, they also procured two million bales alone during the lockdown period.