Despite encountering various economic challenges, Bangladesh is poised to increase its cotton imports in the marketing year (MY) 2024-25 to meet the rising global demand for garments. As per US Department of Agriculture (USDA), the nation, ranked second-largest garment exporter after China, is expected to import 80 lakh bales of raw cotton (1 bale equals 218 kilograms), marking a 6.7 % increase from MY 2023-24.
USDA’s report, released earlier this month, predicts that local spinning mills will utilize a higher volume of raw cotton due to reduced imports of yarn and fabric. The report also anticipates a 7 % to 10 % growth in garment exports in 2024, following a decline in orders during the global economic slowdown. Notably, ready-made garments exports in first two months of 2024 amounted to $9.47 billion, reflecting a 13.2 % year-on-year increase, with this growth expected to persist into MY25, thereby driving up raw cotton imports.
One factor contributing to increased cotton consumption is the dwindling foreign exchange reserves, which may prompt a shift towards more affordable cotton over pricier fabrics. The report highlights that many garment factories in Bangladesh operate their own spinning mills and prefer importing raw cotton rather than yarn. These vertically integrated companies, benefiting from garment exports, can easily secure letters of credit (LCs) due to their access to US dollars. Conversely, companies solely importing yarn and fabric may face forex challenges, leading to reduced imports.
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