Trade war? Why Bangladesh blocked the import of yarn via land ports from India

Bangladesh has reportedly stopped importing via land ports from India from Tuesday, according to a report. Bangladesh's National Board of Revenue (NBR) has suspended the import of yarn from India through land ports. The order pertains to the import of yarn through Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari land ports in Bangladesh.

It was through these ports that yarn was imported into the country from India. This comes as India withdrew its transhipment facility for Bangladesh ,citing significant congestion at airports and ports.

In February, the association of the Bangladesh textile mill owners demanded that the authorities stop the import of yarn from India. Following this, the Bangladesh Trade and Tariff Commission approached the authorities requesting the same. The Commission said the move would promote the use of locally produced yarn in the garment industry.

The yarn imported from India was cheaper and was causing local producers heavy financial losses, the Commission alleged.

Bangladesh, one of the biggest garment producers, imports yarn produced from India. The raw material is stockpiled in Kolkata before being transported to Bangladesh. The cheap yarn is so popular among Bangladeshi manufacturers that it allegedly hit the sales of domestically produced yarn.

Also read: Bangladesh shunning India? Dhaka hunting for other sources to import potatoes, onions

Many times, the yarn is sold at prices lower than those declared at the Customs House, according to Bangladeshi authorities. Due to lower prices, these Indian yarns have become increasingly popular among Bangladeshi manufacturers, reducing demand for domestically produced alternatives. This also affects the market of yarn imported from China, Turkey and Uzbekistan.

While NBR chairman Abdur Rahman Khan told reporters that the decision was made to protect domestic industries, market watchers feel this will raise costs and delay raw material procurement.

This isn't the first time that Dhaka has taken steps to wean off its dependence on Indian goods. Earlier, Bangladesh had decided to look at sources other than India to import potatoes and onions. The plan was to replace Indian potatoes with those from Germany, Egypt, China, and Spain. Onions can be bought from China, Pakistan and Turkey. The reasons cited by authorities for the move are "the rising prices of onions and potatoes in the Indian market" and the "various decisions taken by Indian authorities to discourage exports."

World