New Delhi: Bangladesh’s decision to ban yarn imports from India through its land ports could result in logistical costs and add delays, but it is unlikely to trigger a broader trade conflict, say experts ThePrint spoke to.
On Wednesday, Bangladesh National Board of Revenue (NBR) suspended yarn imports through the Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari land ports to address concerns within the domestic textile sector regarding false declarations and unfair competition, according reports in Bangladeshi media.
The move came days after India rescinded its 2020 order permitting the transshipment facility for Bangladeshi goods through its land customs stations to third countries.
India attributed the decision to “congestion” at its ports. It followed Bangladesh Chief Adviser Muhammad Yunus’s comments during a trip to China, arguing that Dhaka is the “only guardian” of the Indian Ocean since India’s Northeast is “landlocked”.
Bangladesh Textile Mills Association (BTMA) has long criticised the influx of Indian yarn through land ports, alleging that Indian exporters have been falsely declaring yarn counts and underpricing their products.
BTMA president Shawkat Aziz Russell told Prothom Alo that Indian mills are selling yarn and fabrics at prices below production costs, undermining local industries.
In February, the BTMA had called for the imposition of anti-dumping duties on Indian yarn and urged the government to halt yarn imports through land ports until proper infrastructure was established to prevent false declarations.
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Impact on import dynamics
In 2024, India exported a total of $1.6 billion worth of cotton yarn and an additional $85 million in manmade fibre (MMF) yarn globally, a large portion of which traditionally moved via land. India primarily exports cotton to Bangladesh, China, Vietnam, Indonesia, Taiwan, Thailand, and other countries, with Bangladesh and China being the largest importers of Indian cotton, according to a 2024 Ministry of Textiles report.
Bangladesh was the largest recipient, accounting for about 45.9 percent of India’s total cotton yarn exports.
Textile mills in northern India, especially small and medium-sized units, are expected to be hit hardest by the latest move. These producers have typically relied on land routes to export yarn due to their lower logistical costs. With the closure of that option, they will now be forced to reroute shipments through seaports such as Mundra, Thoothukudi, or Nhava Sheva, which could raise both costs and delivery times.
Bangladeshi garment exporters who depend on Indian yarn will also face increased expenses and shipment delays.
In 2024, Bangladesh’s yarn imports rose by 31.45 percent, reaching 12.15 lakh tonnes, with 95 percent sourced from India, according to BTMA data. The price gap between imported and local yarn is 20-25 cents per kg, with the cheaper Indian yarn being a more attractive option. The Bangladesh government’s reduction of cash incentives for local yarn, coupled with increased demand for finer count and man-made fibre yarn, boosted imports.
According to experts in Bangladesh, while initially the shift to sea-based yarn imports is expected to increase logistical costs and may lead to delays, particularly affecting small and medium-sized textile mills in northern Bangladesh that previously relied on cost-effective land routes, overall, the suspension is expected to benefit Bangladesh’s domestic textile sector.
“The decision to stop yarn imports from India through land ports could offer some immediate relief to local spinning mills in Bangladesh by reducing competition from lower-cost Indian yarn. Domestic mills may benefit from stronger demand and improved capacity utilisation in the short term,” Dr Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh.
“However, this move could also have unintended consequences for the broader textile and garment industry by pushing up input costs, particularly for small and medium-sized manufacturers who rely on competitively priced yarn,” he added.
BTMA director Mohammad Khorshed Alam told Prothom Alo that this move would curb irregularities and allow knitwear industry owners to import yarn more efficiently.
Though sea shipments take slightly longer, media reports said, they are expected to be 10 percent cheaper than land-based imports. Sea ports are also better equipped to handle quality control measures, ensuring that yarn specifications are met accurately.
“Over the long term, limiting import options risks reducing supply chain flexibility and could affect Bangladesh’s competitiveness in the global apparel market,” said Rahman.
“Policymakers need to carefully balance protecting upstream industries like spinning mills while ensuring that downstream sectors—the true engine of Bangladesh’s export earnings—are not adversely impacted,” he added.
‘Not a trade war’
According to trade data, India exported cotton yarn valued at $3.57 billion in 2024, marking a compound annual growth rate (CAGR) of 7.3 percent over the past five years.
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations, told ThePrint that while the move would impact Indian exports to Bangladesh, it’s unlikely to trigger a broader trade conflict. Instead, he suggested strategic economic reasons behind the decision. “This is probably not about bilateral tensions,” Sahai said.
“Bangladesh may be aiming to increase the US content in its export products. Doing so could reduce the tariffs it faces from the US under the new regulatory environment. In that context, sourcing more cotton from the US makes sense,” he added.
Sahai added that if Bangladesh believes Indian yarn is being dumped at unfair prices, it could pursue anti-dumping measures. However, yarn prices will ultimately depend on global demand and supply dynamics. “If demand rises, prices will go up. If supply increases, prices may come down,” he explained.
Ajay Srivastava, former director general of Foreign Trade and current head of the Global Trade Research Initiative (GTRI), emphasised the importance of the Bangladeshi market for India. “Bangladesh accounts for over 45 percent of India’s cotton yarn exports. The recent import suspension by Bangladesh’s National Board of Revenue will have a serious impact.”
Still, Srivastava remained optimistic about the long-term outlook.
“India is the world’s top producer of high-quality cotton yarn. While this move is a setback, it’s likely that both countries will reach an understanding in the coming months,” he said.
(Edited by Sanya Mathur)
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Is Kolkata not a port,? From WB why would products be shipped to western ports to send to Bangladesh? Your article has serious errors.