Bangladesh garment products are facing a non-competitive situation because of some adverse decision of the Indian government. The India is a major source of cotton for Bangladesh textile industries. It meets around 50 per cent cotton demand of Bangladesh. During the last calendar year Bangladesh imported 6.1 million bales of cotton from India and the price was 70 cents per pound. Recently India increased the cotton price 80 cents per pound discouraging export of cotton because fall of cotton production due to drought. Bangladesh, Pakistan and Vietnam are the major importers of Indian cotton. Recently, the Indian authorities have also decided to impose supplementary duty on Bangladesh Ready Made Garments (RMG) and also want to make double the Counter Veiling Duty-CVD. Currently Bangladesh is to pay 30 per cent CVD charge to export RMG to Indian market. India decided to double the CVD charge, which means Bangladesh would have to pay 60 per cent CVD charges for exporting RMG to the Indian market. RMG businessmen considered the Indian decision as detrimental to Bangladesh Garment sector and Bangladeshi RMG would lose its competitive edge in the Indian market. Recently Bangladesh and Indian commerce ministry officials met in New Delhi to find out ways and means of increasing business between the two countries. In the meeting, Bangladesh officials strongly protested the Indian decision of doubling the CVD charges and requested the Indian officials to stop the decision. Bangladesh officials also informed their counterparts that if India sticks to its decision it will affect commercial relations between the two countries. It is learnt that the Indian RMG producers have been lobbying since long to put supplementary duty on Bangladeshi RMG because they are facing tough competition with Bangladesh RMG. A commerce ministry source said that the Indian officials noted Bangladesh concern about doubling the CVD charges but did not make any commitment whether Indian side would reconsider the matter. Bangladesh would have to pay heavy price because of the Indian decision of increasing cotton price and discouraging cotton export. Bangladesh will have to look for other sources for import of cotton. Australia, Brazil and the USA are likely to be alternative sources. But import costs would be higher because of freight charge and lead time would also be more, which would make difficult to maintain the commitment of supply.
