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  • Cotton import procedures in Bangladesh

    Chapter 6 - Market profiles - Bangladesh 

     
     

    The procedure for importing cotton into Bangladesh is fairly simple. The importer has to be registered with the Controller of Imports and Exports as an importer and must have an import registration certificate, generally known as an IRC, issued by the Office of the Controller of Imports and Exports. This certificate is renewable yearly on deposit of a renewal fee. In addition an import permit from the Ministry of Agriculture is needed; this is usually granted within three days without any difficulty. Only United States cotton needs to go through a fumigation process, because of the high use there of genetically modified cotton and chemicals. There is no customs duty on imports of cotton into Bangladesh.

    The textile companies import cotton mostly through international trading houses. These traders have representatives in Dhaka, who act as indenter. The cotton-buying companies approach them giving their requirements and the indenters make them offers with full specifications and details on origin and prices. The long relationship between the buyers and these indenters functions very smoothly. Occasionally the indenters propose new cotton sources to buyers, including those from Africa. Hanif Spinning Mills for example has bought cotton from Zambia, upon the recommendation of Dunavant, an international trading house with representation in Bangladesh. Names of some of these local agents and indenters can be found at the end of this section.

    Bangladeshi importers follow International Cotton Association (ICA) rules and contracts, with two exceptions. When importing from government companies in India, East Indian Cotton Association rules are followed. Imports from Egypt follow the Alexandria Cotton Rules. Payment is done through letter of credit.

    Contract parameters mainly cover staple length, micronaire range and strength of the cotton. However, other considerations such as neps, trash content (i.e. contamination), sugar content and maturity, though not part of the contract, may cause serious difficulties. That is one reason why the importers prefer cotton from established sources, as they know exactly what is coming. Price is the main consideration for buying decisions although other parameters are also looked at.

    Most yarn spinners in Bangladesh source around 70% of their cotton requirements from Central Asia, mainly Uzbekistan and Turkmenistan. Ten per cent of imports come from the United States, and the remaining 20% from India, Pakistan, the Syrian Arab Republic, Australia and various African countries. Yarn spinners receive advance fibre information measured using the HVI (High Volume Instrument) system.

    All purchases are made through contracts to ensure clear and correct understanding between the buyer and seller on the following factors:

    • Quality. Based on a sample or description of grade specifying range of staple length, micronaire range, Pressley range (a measure of strength), uniformity, percentage of short fibre, percentage of non-lint content, tolerable level of stickiness, etc.
    • Percentage of sampling at destination.
    • Procedure for settling disputes about quality or fulfilment of contract obligations.
    • Responsibility regarding contamination or stickiness.
    • Price in terms of currency, weight and place of delivery and shipment periods.
    • Tolerances for weights and specifications.
    • Port of shipment and port of destination, whether partial shipments are allowed or not, whether transshipment is allowed or not, whether shipment is to be in containers or break-bulk carriers.

    Buyers in Bangladesh prefer to establish long-term relationships with a few agents who represent reputable trading companies in various cotton exporting countries. 

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    Cotton Exporter's Guide

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