Apr 22, 2010
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India's ban on cotton exports to hit Bangladesh

Apr 22, 2010

DHAKA (Reuters) - Bangladesh's prime export industry textiles may suffer badly following India's restrictions on cotton exports this week, a business leader said on Thursday 22 April.

Bangladesh buys 30 percent of its cotton needs from India transported by land, but supplies have stopped after the export ban was imposed, said Abdul Hai Sarker, president of the Bangladesh Textile Mills Association.

"The decision will increase our production cost and also make it difficult for us to reach (send) our products in time to the importers," he told Reuters.

Textiles, mainly ready made garments, are Bangladesh's main export, generating $15.56 billion or 80 percent of the country's annual export income in the fiscal year to June 2009.

India, the world's second biggest cotton exporter, stopped cotton exports this week to cool rising domestic prices, which surged more than 25 percent since October because of poor harvests and expectations of higher demand.

"The export ban will hurt our spinning mills and export oriented knitting manufacturing firms," said Kutubuddin Ahmed, a leading exporter of textile products.

"The decision will not only hike yarn prices but will also hit export performances," said Ahmed.

India's cotton exports have risen sharply since October last year as demand from China and Bangladesh soared, Ahmed, also a former president of Dhaka Metropolitan Chamber of Commerce and Industry, said.

"Now we have to spend more money on importing cotton from other countries," he added.

Bangladesh fills 60 percent of its annual demand of 4 million bales of cotton from Uzbekistan, the world's third-largest cotton exporter, officials said. It also buys cotton from Russia and U.S.A. worth more than $1.5 billion.

(Reporting by Serajul Islam Quadir; Editing by Michael Hogan)

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