The withdrawal will be effective immediately for the export of 0.20 million bales of raw cotton against which the letters of credit (L/Cs) have already been opened by the Bangladeshi importers.
Besides, India has agreed to export 1.1 million bales of raw cotton to Bangladesh out of the total 5.5 million bales that it has decided to sell globally this year, a high official in the Ministry of Commerce (MoC) said. India imposed restriction on cotton export in April this year.
"We are very happy that the Indian government has lifted the ban. I hope the decision will be implemented very soon," Faruk Khan, Commerce Minister told the FE.
"India has extended their support to Bangladesh to ensure its cotton security', he said.
A top official in the MoC said they were informed by the Bangladesh mission in New Delhi on Sunday about the Indian decision to withdraw the ban on cotton export. This is the outcome of recent visit of Bangladesh commerce minister to India, the official claimed.
The textile mill owners and apparel exporters hailed the decision of Indian government, saying the decision would help cool down the domestic volatile yarn market.
They said the prices of yarn in both local and international markets rose to $5.50 to $5.60 per kg in recent period from what was about $ 1.0 or less in two months back and less than $ 3.0 two years back.
The prices of cotton and yarn shot up in recent months due to crop failure in different countries including Uzbekistan, China, Pakistan and Brazil.
Besides, the cotton growers in the countries concerned in the last season put less than normal acreage under cotton because of the losses they had suffered because of declining prices of the commodity due to global recessionary effect. The price of cotton even went down to 60 cents a kg.
India enforced restriction on cotton export in April this year in line with the demand made by domestic spinners. Following the restriction, the availability of 0.14 million bales of cotton, against which L/Cs were opened by the Bangladeshi importers, became uncertain, textile mill owners said.
The recent visit of Bangladesh commerce minister played a vital role in convincing India to export the cotton against the L/Cs that Bangladeshi importers opened before the imposition of restriction.
Faruk in his press briefing on October 26 on his return from India said the Indian government had agreed to withdraw the ban on the export of cotton to Bangladesh.
Bangladesh imports about 45 per cent of its required cotton from Uzbekistan, 15 to 20 per cent from India and the remaining portion from other cotton exporting countries, official statistics said.
Abdul Hai Sarker, President, Bangladesh Textile Mills Association said the lifting of restriction by Indian government is a welcome- move.
"We are happy. India has kept its promise made to the Commerce Minister Faruk Khan", Hai told the FE.
He said the prices of cotton and yarn in the local market should come down following the Indian decision.
Meanwhile, an FE report adds: Commerce minister Muhammad Faruk Khan has held out the assurance that his government would provide all kinds of support including power and gas supply to help cotton traders.
His assurance came at a meeting, organised to mark the 10th anniversary of Bangladesh Cotton Association (BCA) at city's hotel.
Muhammad Ayub, president of the association, chaired the function where AK Azad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) was present as the special guest.
The minister said over the last three years, many developed and developing economies saw their export plunge as a result of the global recession but Bangladesh managed to avoid the crisis.
The government is encouraging entrepreneurs to set up more cotton mills, because the sector is providing the crucial backward support to the apparel industry, he said.
He urged businessmen to reduce poverty by generating employment and through social responsibility.
The minister noted that there would be ups and downs in business but businessmen must overcome that and move ahead to make the country's economy strong.
Putting am emphasis on more research work, the minister said every industrial unit should have such a wing for the development of the textile and cotton industry.
Abul Hai Sarker, president of BTMA, Abdus Salam Murshedy, president of BGMEA, and AKM Selim Osman, among others, were present at the function.
-FE, Tue 02/11/2010
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