Bangladesh Considers 20% Safeguard Duty on Indian Cotton Yarn Imports

Bangladesh Textile Industry Seeks Safeguard Duty on Indian Cotton Yarn Imports

Nagpur: Bangladesh’s textile industry is pushing for the imposition of a 20% safeguard tariff on imports of cotton yarn, blended yarn, and grey mélange from India. The proposal comes amid political and economic uncertainty ahead of elections, with industry players seeking protection for domestic manufacturers.

A safeguard tariff is a temporary duty imposed to shield local industries from rising imports. According to reports, a note by a foreign trade research officer in Bangladesh has been circulated among key authorities, including the trade and tariff commission and commerce ministry, recommending the duty. The matter was discussed in a meeting held on January 5, although no official decision has been announced yet.

The development has raised concerns in India, particularly among textile manufacturers in regions like Vidarbha, where a significant portion of yarn production is exported to Bangladesh. Industry leaders warn that such a move could deal a double blow—impacting both yarn exports and domestic cotton prices.

The timing is critical, as India recently reinstated an 11% import duty on raw cotton from January 1, after temporarily lifting it in August. While the earlier duty relaxation allowed cheaper imports and supported the textile sector, the reimposition has already pushed domestic cotton prices closer to the Minimum Support Price (MSP) of ₹8,110 per quintal for premium grades.

Higher cotton costs are squeezing margins for Indian textile manufacturers. If Bangladesh goes ahead with the safeguard tariff, it could further weaken India’s export competitiveness in a key market.

According to industry estimates, nearly 30% of yarn produced in Vidarbha—around 3,000 tonnes per month—is exported to Bangladesh, with about 45 manufacturing units dependent on this trade. Any disruption could lead to a surplus in the domestic market, potentially dragging down yarn and cotton prices.

The demand for a safeguard duty in Bangladesh is reportedly linked to misuse of duty-free import provisions. Certain licensed importers were allowed to import yarn from India duty-free, provided it was used for export-oriented garment production. However, authorities found that some firms diverted these inputs to produce garments for the domestic market, distorting trade practices.

Industry experts believe that any tariff imposition could significantly alter trade dynamics between the two countries, affecting both textile exports and the broader cotton value chain.

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