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A

GLOBAL / COUNTRY STUDY REPORT


ON
BANGLADESH
OF
STEEPLED Analysis of Cotton Industry of Bangladesh
for Business Opportunities for Gujarat / India
Gujarat Technological University IN PARTIAL FULFILMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
[Batch : 2014-16]
MBA SEMESTER III
Shri Jairambhai Patel Institute of Business Management
Gandhinagar

Submitted To : Prof. Swati Patel


Prepared By : Group - 4
Name of Students

Enrolment Number

Jadhav Dhruv

147690592020

Jain Abhee

147690592021

Javiya Jay

147690592022

Delvadiya Jenish

147690592023

Joshi Bhagyashree

147690592024

Page 1

Name of Students

Enrolment Number

Joshi Sharad

147690592025

Students Declaration

Page 2

Institute Certificate
Page 3

Page 4

Table of Content
Sr No.

Title

Page
No.

Student Declaration

II

Institute Certificate

III

Preface

IV

Acknowledgement

10

Plagiarism Report

VI

Executive Summary

Chapter 1

11

Introduction of Bangladesh

13-18

1.1 Geography & Climate


1.2 Economy
1.3 Agriculture
1.4 Industries
1.5 Finance
1.6 Environmental
1.7 Investments
Chapter 2

Cotton Sector

19-28

2.1 Cotton Producers


2.2 Inter coping

Page 5

2.3 Activity of cotton Development Board


2.4 Cotton Consumption
2.5 Cotton Market
2.6 Cotton Seed Market
2.7 Gaining Industry
2.8 Problem Associated with cotton
production in Bangladesh
2.9 Future Direction
Chapter 3

Introduction of Indian cotton industry

31-37

3.1 Major producer state of cotton in India


3.2 Characteristic of cotton produced
3.3 Cotton production in India compare to
other countries
3.4 Price of cotton yarn of 2013-14 in India
3.5 Structure of Indias cotton textile
industry
Chapter 4

STEEPLED Analysis of India


4.1 Social Factor
4.2 Technological Factor
4.3 Economical Factor
4.4 Political Factor
4.5 Legal Factor
Page 6

40-46

4.6 Environmental Factor


Chapter 5

STEEPLED Analysis of Bangladesh

50-59

5.1 Social Factor


5.2 Environmental Factor
5.3 Technological Factor
5.4 Economical Factor
5.5 Political Factor
5.6 Legal Factor
Chapter 6

STEEPLED Analysis of cotton textile


industry

60-62

6.1 Social Factor


6.2 Technological Factor
6.3 Economical Factor
6.4 Political Factor
6.5 Legal Factor
6.6 Economical Factor
Chapter 7

Five Forces analysis of Cotton Industry


7.1 Bargaining power of customer
7.2 Bargaining power of suppliers
7.3 Threats of new entrant

Page 7

63-67

7.4 Threats of substitute product


7.5 Competitive revelry
Chapter 8

Five Force analysis of Bangladesh cotton


textile industry

68-72

8.1 Competitive revelry


8.2 Bargaining power of suppliers
8.3 Bargaining power of customer
8.4 Threats of new entrant
8.5 Threats of substitute product
Chapter 9

Export Policy of India

73-78

9.1 Export In India


9.2 Objectives of EXIM policy
9.3 Policy regulatory from work towards
FDI
9.4 Policies of FDI
9.5 Import policy of Bangladesh
Chapter 10 Import of Bangladesh
10.1 Introduction
10.2 General Provisions
10.3 Import Registration Certification
10.4 Steps involved in Import Procedures

Page 8

79-83

10.5 Import Procedure

PREFACE
As we are very much interested in business, we chose the course of Business
Administration. MBA programme is related with administration and
Page 9

management. It is a professional course rather than vocational and the


profession requires the situational how it exist in practical.
The Master of Business Administration Programme is well structured is well
structured two years post-graduation Programme organised by GTU (Gujarat
Technological University) -Ahmedabad
The GTU prescribes Global Country Study Report (GCSR) by M.B.A.
students and then presents a report to them.
The main objectives of GCR at M.B.A. level is to make students aware about
Globalisation, international business as well as application of management
concept is practical world. And also to develop skill and knowledge is the
student of supplement to the theoretical study of the business management in
general management in general. Only book knowledge and class-room
discussion is not enough for management students. The M.B.A Programme
provides students with a fundamental function and actives as well as an
exposure to strategic thinking and management

ACKNOWLEDGEMENT

Page 10

The global country report being a team effort. A lot of people have
contributed in successfully completing it. We take this opportunity here to
extend our gratitude towards each one of them.
We would begin by thanking to GUJARAT TECHNICAL UNIVERSITY
and our director. Dr. S.O.JUNARE for giving us this platform to enhance our
skill and also to all the project guides for their seamless support and
cooperation, we would also like to thank our faculty member Prof. Swati
Patel who gave us the right direction and guided us all through. At the same
time they encouraged our efforts and motivated us .
Finally, we sincerely thanks to everyone who directly or indirectly helped us
in this report.

EXECUTIVE SUMMARY
Page 11

We have done our global country study report on the topic A STEEPLED
analysis of Cotton industry of Bangladesh for business opportunities for
Gujarat / India as a part of our third semester. Our objective behind this
study was to analyse various factors affecting cotton industry in India and
Bangladesh. And also finding various business opportunity between India,
Bangladesh.
The cotton sector was primarily part of the process of import substitution
industrialization to replace imports. After the liberation, Bangladesh adopted
export oriented industrialization by focusing on the cotton industry.
In our project we further with the overview to the country as well as cotton
industry of the country. We have done the steeple analysis of India through
we got the idea about the business scenario of the India. What kind of social
culture in India! we got known that India is mixed culture country. In India
there different region people are stay.
There was also export of Indian silk, muslin cloth of Bengal, Bihar and
Orissa to other countries by the East Indian Company. The textile industry in
India traditionally, after agriculture is the only industry that has generated
huge employment for both skilled and unskilled labor in textiles.
The strength of our industry is qualitative raw cotton. In India and
Bangladesh the low cost of labor, so the overall cost of product will reduce.
For our topic the different opportunities are the, favorable demographics in
the domestic market; increasing young population coupled with rising
income level than emergence of retail industry as a whole and development
of various malls provide huge opportunities for the apparel segments. So the
wide range of opportunity through we can find business opportunities.
We have also got known that such major player in India and Bangladesh.
Than major exporter from India and Bangladesh. We found them through we
can get known that how we can get the row material. For the start the
business we get information about how that will help in tread. We also found
the visa process to go foreign country. That what documents will required for
that, fees for its application.

Page 12

We found different opportunities to do business and also find different


possibilities to where to invest and where to do partnership.
And feasibility to do business, financial and marketing plan will be done in
next semester.

Page 13

Introduction
Of
Bangladesh

Page 14

Bangladesh have a glorious history in textile production. The finest cotton


fabric- Moslin once produced in medieval Bengal was famous through out the
world. However, the production and trading of Moslin gradually declined during
the British rule ultimately resulting to closure of the industry by early nineteenth
century. During Pakistan era, there had been limited effort to introduce cotton in
this part (East Pakistan) with little support for research and development of the
crop and as a consequence cotton remained confined to laboratory until early
seventies. Importance of producing cotton domestically strongly soon after the
liberation of the country in 1971 when the supply of raw cotton was suspended
from Pakistan. Cotton is one of the important cash crops in Bangladesh. It is the
main raw materials of textile industry. Annual requirement of raw cotton for
textile industry of Bangladesh is estimated around 2.5 million bales. Local
production is only about 0.1 million bales. Around 4-5% of the national
requirement is fulfilled through the local production, remaining 95-96% is
fulfilled by importing raw cotton from USA (40%), CIS (35%), Australia,
Pakistan, South Africa.

Page 15

1.1 Geography and Climate


Latitude:Bangladesh

is a South Asian country lying between 20o 34' and


26o 38' North latitude and between 88o 01' and 92o 41' East Longitude.

Climatic variations:The

climate of Bangladesh is tropical monsoon


marked by sweltering temperature and high humidity. Bangladesh has mainly
four seasons. Summer (March-May), Monsoon (June-September), Autumn
(October-November) and Winter (December-February).

Rainfall:Total rainfall occurs during monsoon ranges from 1194 mm to 3445


mm. Average annual temperature is 26o c and while rainfall is 2540 mm.

Humidity:Highest 99% (July), lowest 36% (December & January).

1.2 Economy
Bangladesh has an agrarian economy, although the shear of Agriculture has
been decreasing over the last five years. Yet it dominates the economy
accommodating major labour force living in the rural areas. From the marketing
point of view, Bangladesh has been following a mixed economy that operates
on free market principles.
Some macro economic indicators of Bangladesh in the fiscal year 2006 as
follows
Total GDP (in constant price): 42.44 billion US$
Total GNI (in constant price): 66.03 billion US$
GDP growth rate: 6.63 %.
Sectora Share of GDP (%):
Agriculture: 19.61

Page 16

Industry: 27.91
Service: 52.48
Growth rate in Agriculture: 2.95%
Per capita income: 476 US$.
Total consumption: 49.43 billion US$
Private: 45.99 billion US$
Public: 3.44 billion US$
Total Investment: 15.28 billion US$
Private: 11.55 billion US$
Public: 3.71 billion US$
Total National Savings: 17.14 billion US$

1.3 Agriculture
Agriculture is the driven force of our national economy, 48.1% of the total
population are directly involve with the agriculture. Agriculture sector
comprises crops & horticulture, Animal farming/livestock, Forest & related
service and fishing/fisheries. All of them crop sector alone contribute 11.72% to
the GDP of the country. There are many public & private sector organizations
are involved in Agricultural development in the country. Rice is the main staple
food of Bangladesh and its production is about 26530 thousand metric tones.
Other major crops are wheat, Maize, Potato and Jute. Some basic information
on agriculture of Bangladesh is as follows.
1. Total cropped area : 14.11 million hectare
4. Cultivated area : 7.98 million hectare
3. Forest area : 2.60 million hectare
5. Cultivable waste : 0.27 million hectare
6. Current fellow : 0.47 million hectare
Page 17

7. Cropping intensity : 180%


8. Single cropped area : 2.87 million hectare
9. Double cropped area : 4.13 million hectare
10. Triple cropped area : 1.03 million hectare
11. Growth rate of Agriculture sector : 2.95%
12. Total annual food production : 26.13 million metric tons
13. Total requirement of food crops : 23.85 million metric tons
14. Annual egg production : 4,780 million
15. Annual fish production : 1.99 million metric tons

1.4 Industry
In the total population 35.8 % are involve in the industrial sector in the country.
Textile & Readymade Garments alone employed about 5.2 % of the total
population. The major Industrial products are Cotton textile, Jute textile,
Garments, Paper, Fertilizer, Irons & Steel, Cement, Petroleum products,
Cigarettes, Matches, Drugs, Pharmaceuticals, Tea, Salt, Edible Oil etc.
Some basic fact of Industrial sectors of Bangladesh is as follows.
Share of Industrial sector in GDP(%): 27.91
Contribution of Garments industries in GDP: 27%
RMG contributes 7.5% of total export
Production of Cotton textile: 17530
Yarn: 13838 metric ton
Cloth: 3692 thousand meter
Production of Jute textile: 22313
Page 18

1.5 Finance
National finance is comprises with tax revenue and non-tax revenue.
Total revenue: 66.89 million US$
Tax revenue: 53.93 US$
Non-tax revenue: 12.96 US$

1.6 Environment
Water and Air pollution are two major concern of Bangladesh environment at
the present moment. A World Bank report of 2000 states that the diesel vehicles
are accountable for 44% particulate matter and 85% particulate nitrogen oxide
pollution of Air in Dhaka city.

1.7 Investment
medium Bangladesh consist low waged and available labour force and
manpower resources. There are huge scope to invest in the sector of cotton &
Jute Textile, Readymade garments, Frozen Foods, Processed Foods, Agrobased
industries and Small & Cottage Industries.

Page 19

Cotton Industry

Page 20

2.1 Cotton Production


In Bangladesh, cotton is generally grown as a rain fed crop. Two types of cotton
are grown in Bangladesh namely- i) Upland cotton (Gossypium hirsutum) & ii)
Hill cotton (Gossypium arboreum). American cotton is cultivated in the South
western region, Northern region and Central region covering more than 32
districts out of 61 plain districts of Bangladesh. The course type Hill cotton, on
the other hand is grown in three hill districts. Hill cotton is an indigenous
variety and cultivated in Jhum system. Jhum is a mixed crop cultivated mainly
in hill slopes where more than two crops are seeded in a pit and harvested
sequentially. The crops mainly cultivated in Jhum are Aus rice, Sesame, cotton,
Maize, Marpha, Chili, Pumpkin etc. Hill cotton is used for handloom cloths as
well as grown for export. With a total land area suitable for cotton cultivation
estimated 2.42 lakh hectares cotton production is taking place in 35 districts out
of 64 districts in Bangladesh. After functioning of CDB the crop year 1997-98
saw the area devoted to cotton production peaked at a total of 54,429 hectares,
or a utilization rate of 22.5% as a result of gradual expansion of coverage over
the past 25 years. During the following crop year 2012-13, however, cotton
areas shrank by 17.6% (11,789 ha) to 42,640 ha due to floods, low price,
degeneration of yield capacity of existing varieties and lack of modern
technologies. In crop year 2001-02 nevertheless, cotton areas reportedly started
to increase again. American cotton hectarage, for instance, rose from 29,120 ha
to 37,950 ha or an increase of 8,830 ha and ultimately reached at 41975 ha in
the crop year 2014-15, an overall increase of 4,025 ha. One of the reasons for
the limited increase in hectarage is the shift of farmers from cotton production
to other crops. This is because of the declining economic prospect in cotton
compared to the profits derived from growing vegetables, spices, tobacco,
flowers, banana and other crops.

Page 21

2.2 Intercropping
To make the cotton cultivation profitable and to provide additional income to
the farmers, the introduction of inter and relay cropping with well experienced
management practices have open up a new hope of better competitiveness of
cotton crop in cotton cultivation. So, much emphasis and stress have been given
to inter and relay cropping of cotton for getting more total income from the
same piece of land. This system of cotton cultivation has already gained
popularity due to the rational and tireless efforts of CDB extension staff. Among
the inter crops Amaranths sp. (Red amaranth, amaranth), radish (as leafy
vegetables), onion, mungbean, chili, turmeric, ginger etc. have been
successfully cultivated as inter and relay crops with cotton. Farmers are getting
about 25%more net profit by growing different leafy vegetables and about 50%
by growing turmeric/ginger with cotton. Sowing of wheat between cotton rows
in November also revealed encouraging results. Inter cropping of ground nut
with cotton was also reported to give more total income over the sole cotton.

2.3 Activities of The Cotton Development Board


(CDB)
Cotton Development Board was established through a resolution in 1972, to
boost up cotton production in the country under the Ministry of Agriculture,
Government of the People's Republic of Bangladesh. The mandate of the Board
was to introduce and promote cotton cultivation in Bangladesh. But practically
the work started in 1977 with the introduction of a new American variety
(Deltapine-16) from USA.
At present all activities of cotton are being conducted by CDB such as

The activities of the CDB have four main focuses.


Page 22

These are the following.


i)

Research on cotton

ii) Extension Service including technology transfer, training & demonstra tion
iii)

Seed Production & distribution and

iv)

Marketing and other institutional support.

1) Research.
CDB has 03 Research Training and Seed multiplication farms and one
germplasm preservation and evaluation centre for upland cotton. In
addition a separate research station and other 3 substations located at
three hill districts for research on hill cotton. CDB is conducting research
on 5 disciplines viz., plant breeding,, agronomy, soil science, entomology
and plant pathology although CDBs research is not up to the mark due to
short of qualified and adequate number of scientists.

2) Extension.
CDB has four regional Offices each having two to four zones to a total of
13 zones in the country and each zone is further divided into10-18 units
depending upon the intensity of cotton cultivation. Each unit is headed by
a Cotton Unit Officer (CUO). In a number of units, the CUO is assisted
by 1-2 Store cum field man (SCFM) and Assistant Cotton Unit Officer
(ACUO). Based on the previous years target and achievement, and after
consultation with local growers, the Cotton Unit Officers (COU) and
Store Cum Field (SCFM) man fix the annual target for cotton acreage for
their respective unit and channel this information via the cotton
Development Officer (CDO) and Chief cotton development officer
(CCDO) to the Deputy Director (DD) at regional office. The DD fixes up
the final target for the specific units and forwards it to the Executive
Director (ED) at the headquarter for the approval. CDB strives to achieve
Page 23

the annual target by under tacking several extension related activities that
include the following:

3) Training.
CDB arranges training for contact farmers at three of its Research,
Training and Seed Multiplication Farms. Training for contract farmers is
organized twice every crop season. There are fully residential training
and duration is 5-7 days. CDB also conducted one day training for the
general farmers at the farmers field for 6 hours. CDB also organizes
field days as motivational programme. Training for extension staff and
Officers are also designed to communicate information about new
technology on cotton production.

4) Seed production and distribution.


One of the important extension activities of the CDB is the production
and distribution of cotton seed. CDB ensures supply of 350 tons of
certified seed annually to the farmers, fulfilling 60-70% of the national
seed requirement. CDB produces breeder seed and foundation seed in 03
seed multiplication farms and certified level of seeds are produced also
through contract farmers in selected seed blocks. CDB provides 50%
inputs free of cost to the contract farmers for producing seed in the seed
block.

5) Credit.
CDB provides credit from its own fund to small and marginal farmers
through inputs like seed, fertilizers and pesticides. Every farmer provides
quality seed, fertilizers and pesticides. Credit money is recovered at the
time of seed cotton procurement. There is a Memorandum of
understanding (MOU) between CDB and BKB , RAKAB to provide
credit to cotton farmers. Accordingly, Bangladesh Agriculture Bank
(BKB) and Rajshahi Krishi Unnayan Bank(RAKAB) provide credit to
the cotton farmers.

6) Other activities.

Page 24

Field level extension personnel of CDB are fully responsible for


dissemination of technical information related to cotton production in the
country. Core extension activities at the field level includes regular field
visit by the grass-root level CDB staff, interaction with cotton farmers
individually and in groups, establishment of demonstration plots,
conducting farmer group meetings, field days etc. for the exposure to the
farmers.

2.4 Cotton consumption


Medium staple cotton (Upland cotton) is primarily used by the textile Industry,
which has an estimated annual installed capacity of about 2.5 million bales. But
local production mitigates 4-5% of total requirements. On the other hand 50%
of comilla cotton and a part of medium staple cotton are utilized by the cottage
industry and individual farm family and rest 50% of the short staple cotton
exported in England, Japan and other countries, cotton seeds are also used to
extract edible oil in the oil industry. However, the use of cotton plant and its
products include among other as fuel, as seed and fiber, as cotton seed cake,
cotton seed oil, as yarn for textile, as rug and mattress etc.

2.5 Cotton Market


Cotton Development Board (CDB) and private ginners are the buyers of seed
cotton produced in the country. CDB purchases seed cotton from the contact
farmers for seed purpose. CDB also purchases seed cotton from general farmers
in order to assist farmers in marketing of seed cotton and also to ensure
reasonable price for the cotton farmers. Prices of seed cotton and lint are fixed
by the government through a committee. The price of the seed cotton is fixed on
the basis of current international market price of seed cotton.

2.5.1 Marketing and processing of cotton in the private sector.


Cotton is a cash crop and involved in international trade. Therefore, its
marketing system is relatively rather complex. The marketing and processing of
cotton starts from the farm gate after harvest of cotton and goes through a
process at various steps, which have been depicted.(Annex III). Involvement of
different parties is shown in the cotton - marketing channel.
Page 25

2.5.2 The place of cotton in foreign trade.


Maximum portion of raw cotton requirement are met from the imported cotton.
Local production can meet only 4%~5% of the requirement. Remaining 95-96%
are imported from different countries including USA, Uzbekistan, Australia,
Pakistan, India, Sudan, Uganda, Turkmenistan, Kazakhstan, Turkey, Egypt,
China, Nigeria, South Africa, Cameroon etc.

2.6 Cotton seed industry


Private ginneries produce cotton crude oil. Some of them are used in soap
industries and rest of the crude oil is refined by refine industry for edible
purpose. The speller machine used by the ginneries for oil extraction, which can
extract 10 to 12% crude oil from cotton seeds. Cotton oil refinery industry can
produce 78 to 80 kg refined oil from 100kg crude oil. The oil cake is generally
used for livestock feeding. Cotton oil cake has high demand in the market for
multiple uses. Rural based ginning facilities and cotton oil processing plants is
promoting rural industries and creates employment opportunity. This will have
very significant social and economic impact both at the farmer level, regional
level as well as macro level.

2.7 Ginning industry and capacit

Page 26

CDB has nine ginning centers located at different farms and cotton growing
areas. The ginning centers have a total of ten Lumus 4012 inch saw- gins with
a capacity of about 3 tons seed cotton per 8- hour shift each. Besides, these
there are four local made ginning machines. CDB does provide ginning
facilities to the cotton growers, there are large number of private ginners in the
nearby locations of the cotton growing areas, who provide ginning facilities to
the cotton growers. There are more than 50 private ginners in the country and
they play important role for cotton production and marketing. They purchase
seed cotton from the farmers through competition. They sell lint to the spinning
mills after ginning from their own ginning centers.
2.7.1 Fiber Industry
Total Spinning Mills: 237 Nos
Total Spindles: 4858473 Nos
Total Rotors: 100890 Nos
Annual production of yarn: 500 million kg
2.7.2 Textile and Confection Industry
Total Oven Mills: 1343 Nos
Page 27

Annual production of Oven fabrics: 1000 million meters


Total Knit & Knit dying Mills : 446 Nos
Annual production of Knit fabrics: 1400 million meters
Total Ready made Garments Unit: 3800 Nos
Annual production of Ready made Garments: 215 million dozens
Total Hand Looms: 148350 Nos
Annual production of Hand Looms: 92 million meters

2.8 Problems Associated with Cotton Production in


Bangladesh
The following are the major problems associated with cotton production in
Bangladesh.
2.8.1 Underdeveloped research activities
Research section is considered the key of development. This section did not
improved due to lack of trained manpower, laboratory facilities, adequate fund,
collaborative project with foreign countries etc.
2.8.2 Low yield
Modern production technologies were not developed. Varieties are low
yielding.
2.8. 3 Long duration crop

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Long duration crop needs 6-7 month for production. Commercial five varieties
are grown in Bangladesh namely, CB-1, CB-3, CB-5, CB-9, and CB-10. Out of
five varieties, only CB-5 and CB-9 are hairy varieties which are slightly tolerant
to sucking pests and all the varieties are long duration and they need at least six
months. Some of the private companies have been imported hybrid seeds for
trial to see the yield performance but these are not performing better than open
pollinated varieties developed by CDB in addition it needs high inputs for
cultivation.
2.8.4 High input cost
High input cost, particularly fertilizer and pesticides. This is because of the
heavy reliance on pesticides for cotton pest management.
2.8.5 Competition from other crops
At present cotton is highly competitive with other crops and in many cotton
growing areas farmers find it more profitable to grow other crops such as rice,
maize, vegetables, banana, flowers, tobacco etc. than cotton. Thats why farmers
are migrating to other crops.
2.8.6 Insect pests and Diseases of cotton
Similar to many countries, cotton in Bangladesh is major polluter crop due to
the heavy and indiscriminate pesticide use, especially insecticides for Aphids,
Jassids and cotton bollworms. The number of insecticide sprays exceeds 15-20
per season bringing the cost of insecticides to more than 40% of total input costs
and triggering pest resurgence and secondary out breaks. Important insect pests
of American cotton in Bangladesh include the chewing insect namely American
bollworm, spotted bollworm and pink bollworms and the sucking insects
namely the Jassids, aphids and whitefly. Sometime Spodoptera is also become a
serious pest in some areas of Bangladesh. The insect pest complex on Hill
cotton is similar to American cotton.
2.8.7 Weed problem
During cotton cultivation, in Bangladesh high rainfall and high temperature
prevail that enhance huge growth of upland weeds leads to increase cost of
production.
2.8.8 Low market price for cotton
Page 29

In Bangladesh, the price fixed by CDB for its procurement of seed cotton from
its contact farmers also influences the general market price. The CDB rate itself
is fixed by a committee.International market price is the main factor that is
considered by fixing the cotton price in Bangladesh. So, cotton price is the
important factor in determining future cotton production in Bangladesh.

2.9 Future Direction


2.9.1 Cotton based multiple cropping patterns
The land resource is very much limited in the country. Cropping intensity of
Bangladesh is very high (about 180%). Farmers expect to have maximum total
return from their land in a given time period. Many farmers show reluctance in
cotton cultivation for its long maturation period of about 6 months. As such, a
short duration variety of around 4.5 months combined with moderate yield is
very much needed to satisfy the long felt demand of farmers. This type of
variety may be accommodated very effectively in the cropping patterns of
northern districts particularly where winter comes earlier than the other parts of
country. More emphasis will be given on intercropping, relay cropping and
cotton based sequential cropping.

9.2.2 Insect/Pest Issue


Sucking pest infestation at an early stage of crop growth is quite hazardous and
very often escapes the notice of farmers causing heavy damages to the nonhairy cotton varieties under cultivation in the country. Cultivation hairy variety
is most effective measure in controlling the infestation. Work on this dimension
of research is going on since 1985. A highly tolerant variety to sucking to
sucking pest attack associated with higher yield is yet to be found out. The
newly evolved variety CB-9 is moderately tolerant Jassid. Research in this line
would be strengthening to find out a Jassid tolerant cotton variety with high
yield potential. Bollworm especially American bollworm is another virulent
insect causes most of the damages to cotton crop. Hand picking of larvae
followed by use of insecticides at economic injury level under the IPM concept
is found to be very effective and economical in controlling the attack of this
Page 30

insect. However, farmers are not to be attentive in adopting this method. The
farmers spraying insecticides, which is not very effective neither the practice is
economic. The farmers needed training in this area as well as well as they are to
be motivated for effective control of bollworm.

2.9.3 Variety Development


An exclusive attempt on exploitation of genetic resources in cotton is very much
needed for developing a variety with wide desired variability. CDB has more
than 400 germplasms in their gene bank. But due to short of adequate qualified
personnel and other required other required facilities, this highly technical
aspect of research has not taken up yet. CDB likes to be adequately
strengthened with the required facilities to upgrade its capability to embark
upon the vital research program for full exploitation of the potential genetic
resources already available at our gene bank. Research on genetic resources will
be initiated to utilize the broad genetic diversification of the crop especially
development of hybrid and transgenic cotton (Bt) which is resistant for specific
insect with high yielding capacity. Cotton varieties capable of tolerance to
excess moisture and water logged condition of soil will also be considered in
due attention

2.9.4 Low cost management


Reduced cost is the basic way of profit. Cost may be reduced through reduced
tillage, foliar application of nutrients, use of selective herbicides , IPM practice
etc are being introduced.

2.9.5 Education and training


Provision of higher education and training in all level of manpower in CDB to
be qualified for research and extension have been planned. Cotton farmers will
also o be trained.

Page 31

INTRODUCTION
OF
INDIAN
Page 32

COTTON INDUSTRY

Page 33

3.1 MAJOR PRODUCER STATES IN


INDIA OF COTTON

3.2 Characteristics of Cotton Produced


India is unique among major cotton-producing countries because a broad range
of agro-climatic and soil conditions permit cultivation of all varieties and staple
Page 34

lengths of cotton. Indian and international standards use different staple length
definitions for classifying cotton. By Indian standards, about one-half of Indian
cotton is medium staple length, but, by international standards, only about onequarter of Indian cotton is considered medium staple. The North zone tends to
produce mostly short and medium staple varieties, the South zone mostly long
and extra-long staples.

The Central zone a range of medium and long staple .

India has the capacity to produce the full range of staple lengths of cotton
needed to meet the needs of its textile industry. And Indias hand- picked cotton
is considered superior to mechanically harvested cotton in terms of sheen of
finished fabric, amenability to spinning, tensile strength, etc. India, however,
has significant problems in meeting other quality needs. In particular, Indian
cotton is generally contaminated with other fibers and foreign matter and often
consists of admixtures of multiple varieties with different fiber characteristics.
These problems reduce efficiency (yarn realization) in the spinning process and
result in higher levels of yarn impurities and imperfections. A 2001 survey by

Page 35

the International Textile Manufacturers Federation indicated that 5 of the


worlds 10 most contaminated traded cotton types came from India.
Problems with contamination and other quality attributes of Indian cotton have
been a key factor behind the upward trend in cotton imports by Indias exportoriented textile mills since the late 1990s. The risk associated with the
unreliable quality of domestic cotton leads some textile producers to prefer
imported cotton to meet export orders that demand consistent quality.
The significant problems with admixture of varieties and contamination stem
from practices on farms and in market yards that are not amenable to quick
solution. Improvements in quality require better onfarm seed management;
improved technology of handling, transportation, and ginning; investments in
market infrastructure; and a marketing system that provides price premiums that
reflect the costs of supplying quality cotton. Accomplishing these changes will
likely require implementation of grades and standards for domestic cotton and
improvements in marketing that provide adequate incentives to producers,
ginners, and traders to adopt quality- related practices.

3.3 Cotton Production of India as Compare


to other Countries:
Page 36

3.4 Price of Cotton Yarn of 2013-14 Year in


India:

Page 37

3.5 Structure of Indias Cotton Textile


Industry
Unlike other major textile-producing countries, Indias textile industry is
comprised mostly of small-scale, nonintegrated spinning, weaving, finishing,
and apparel-making enterprises. This unique industry structure is primarily a
Page 38

legacy of government policies that have promoted labor- intensive, small-scale


operations and discriminated against larger scale firms:

Cotton farming and harvesting. Cotton is grown in tropical as


well as sub tropical area in India. Mostly the cotton grown in India is from dry
lands and crops mostly depend on the irrigation systems available and not only
on the rain water.

Ginning: Ginning is the process where cotton fiber is separated from the
cotton seed. The first step in the ginning process is when the cotton is vacuumed
into tubes that carry it to a dryer to reduce moisture and improve the fiber
quality. Then it runs through cleaning equipment to remove leaf trash, sticks and
other foreign matter. Ginning is accomplished by one of two methods. Cotton
varieties with shorter staple or fiber length are ginned with saw gins. This
process involves the use of circular saws that grip the fibers and pull them
through narrow slots. The seeds are too large to pass through these openings,
resulting in the fibers being pulled away from the seed. Long fiber cottons must
be ginned in a roller gin because saw gins can damage their delicate fibers.

Oil mill:

in the operation the oil is extracted from the cotton seeds that
are coming form the ginning process. The cotton seeds coming from the ginning
unit are then passed through the pressing unit and crude cotton oil is produced.
The pressed cotton seed oil cake is supplied as the cattle feed. The crude is
further modified as the bio-diesel which could be used as the one of the energy
source. The refined cotton oil is also used as the edible oil but it is proved to be
unfit for the human health.

Spinning. Spinning is the process of converting cotton or manmade fiber


into yarn to be used for weaving and knitting. Largely due to deregulation
beginning in the mid-1980s, spinning is the most consolidated and technically
efficient sector in Indias textile industry. Average plant size remains small,
however, and technology outdated, relative to other major producers. In
2002/03, Indias spinning sector consisted of about 1,146 small-scale
independent firms and 1,599 larger scale independent units.

Page 39

Weaving and Knitting.

Weaving and knitting converts cotton,

manmade, or blended yarns into woven or knitted fabrics. Indias weaving and
knitting sector remains highly fragmented, small- scale, and labor-intensive.
This sector consists of about 3.9 million handlooms, 380,000 powerloom
enterprises that operate about 1.7 million looms, and just 137,000 looms in the
various composite mills. Powerlooms are small firms, with an average loom

Page 40

capacity of four to five owned by independent entrepreneurs or weavers.


Modern shuttleless looms account for less than 1 percent of loom capacity.

Fabric Finishing.Fabric

finishing (also referred to as processing),


which includes dyeing, printing, and other cloth preparation prior to the
manufacture of clothing, is also dominated by a large number of independent,
smallscale enterprises. Overall, about 2,300 processors are operating in India,
including about 2,100 independent units and 200 units that are integrated with
spinning, weaving, or knitting units.

Clothing.Apparel

is produced by about 77,000 small-scale units


classified as domestic manufacturers, manufacturer exporters, and fabricators
(subcontractors).

Composite Mills.Relatively large-scale mills that integrate spinning,


weaving and, sometimes, fabric finishing are common in other major textileproducing countries. In India, however, these types of mills now account for
about only 3 percent of output in the textile sector. About 276 composite mills
are now operating in India, most owned by the public sector and many deemed
financially sick.

Page 41

STEEPLED
ANALYSIS
OF
INDIA

Page 42

4.1 SOCIAL FACTORS :


Managers and policy makers cannot disregard social variables like education
,knowledge ,rural community norms and beliefs which are predominant in
india ,especially in the rural society while cultural differences are unthinkable
for any international manager or even an urban Indian manager.

SOCIOCULTURAL SECTOR
Society and culture is an important factor that must be given emphasis by any
business, specifically those who are operating in the global arena. It is important
that the company must operate in compliance with the social system in order to
gain good reputation and effective public image. On the other hand, cultural
aspect is equally essential, in order to understand the various needs of different
individuals that belongs to different cultures.
-

Population growth rate

Age distribution

Career attitudes

Consumer behavior

Religion and culture itself

Page 43

4.2 TECHNOLOGICAL FACTORS


Technology is considered to be one of the most important factors of textile
industry. That is why the government, in its industrial policy resolution,
industrial licensing policies, MRTP and FERA regulation, and in liberalization
policies, assigned great importance to sophisticated technology and technology
transfer.

The working group on textile & jute industry for the 11th five year plan (20072012) has studied the major problems being faced by the textile industry which
include:
1 structural weakness in weaving and processing,
2 fragmented and technologically backward textile processing sector,
3 fragmented garment industry,
4 inadequate capacity of the domestic textile machinery manufacturing sector,
5 inadequate training facilities in textile sector,
At present, the textile industry is undergoing a substantial re-orientation towards
other then clothing segments of textile sector, which is commonly called as
technical textile. It is moving vertically with an average growing rate of nearly
two times of textile for clothing applications and now account for more than
half of the total textile outlet. The process in making technical textile require
costly machinery and skilled workers.

Page 44

4.3 ECONOMICAL FACTORS


Economical factors such as per capita income, national income, resources
mobilization, exploitation of natural resources, infrastructure development,
capital formation, employment generation, and industrial development influence
textile industry.
Textile industry provides one of the most fundamental necessities of the people
with huge value-addition at every stage of processing.
Today textile sector account for nearly 14% of the total industries output. Indian
fabric is in demand with its ethnic, earthly colored and many textures. The
textile sector accounts about 30% in the total export. This conveys that it holds
potential if one is ready to innovate. It generates massive potential for
employment in the sectors from agricultural to industrial. Employment
opportunities are created when cotton is cultivated.

Page 45

4.4 POLITICAL FACTORS :


The management of business enterprises and their policies are considerably
influenced by the existing political system and an India is a democratic country,
there are probably problem of stability in politics.

Political and government diversity:The reservation of production for very small companies that was imposed with
an intention to help out small scale companies across the country, led substantial
fragmentation that distorted the competitiveness of industry. However, most of
the sector now have been de-reserved, and major entrepreneurs and corporate
are putting-in huge amount of money in establishing big facilities or in
expansion of their existing plants.

Secondly, the foreign investment was kept out of textile and apparel production.
Now, the government has gradually eliminated this restriction, by bringing
down import duties on capital equipment, offering foreign investors to set up
manufacturing facilities in India. In recent years, India has provided a global
manufacturing platform to other multi-national companies that manufacturing
other than products; it can provide a base for textile industry.

And some motivating step taken by the government, other problems still
sustains like various taxes and excise imbalances due to diversification into
states and union territories. However, an outline of VAT is being implements in
Page 46

place of all other tax diversification, which will clear these imbalances once it
is imposed fully.

4.5 LEGAL FACTORS :


Legal environment plays very vital role in textile industry. Laws relating to
industrial licensing factory administration, industrial disputes, monopoly
control, and foreign exchange regulation are examples of legal business
environments in India.

And other factors are lack of trade membership, which restrict to tap other
potential market. And also lacking to generate economies of scale is another
legal factor to this industry. A government has charged higher indirect taxes,
power and interest rates. The uneven supply base also leads barriers in attaining
integration between the links in supply chain. This issue creates uncontrollable,
unreliable and inconsistent performance. The liberalization being carried in the
1990s also ushered in a new era for Indias textile industry. It led to the
relaxation of many of the constraints previously imposed on the textile sector.
Licensing was removed in the early 90s by the statements of industrial policy
and the textile development and regulation order. In 1995, India signed the
agreement of traffic and trade bringing some of its policies at with those at an
international level.

At present, the single biggest factor influencing the textile industry appear to be
the end of the textile quota regime of quantitative import restrictions under the
multi-fiber arrangement (MFA) on 1st January 2005
Under The World trade organization (WTO) agreement on textile and clothing.
The removal of quotas, seen as an opportunity by many, including the
government, is driving investment and liberalization in the textile space.

Page 47

India can also grab opportunities in the export market. The industry has the
potential of attaining $34bn export earnings by the year 2010, the regulatory
polices is helping out to enhance infrastructures of apparel parks, specialized
textile parks, EPZs and EOUs.

4.6 ENVIRONMENTAL FACTORS :


Environment protection and preservation is responsibility of the textile industry.
The government of India is committed to the preservation of ecological balance.
Environment factor, growing awareness of the potential impact of climate
change is affecting how companies operate and the products they offer, both
creating new markets and diminishing or destroying existing ones.
The relatively rapid gains in productivity in the predominately rainfed Central
zone since 1990 are due to technological advances that, if combined with a
continuation of recent modest growth in the North and South zones, could lead
to a substantial hike in national average yields and production.
While this productivity gap indicates that significant further onfarm yield
improvements are possible, a range of technical, economic, and institutional
factors prevent realization of the potential of the varieties cultivated
Following are the few factors which contributes towards the low yield

Delayed Sowing.Late sowing of cotton reduces yields by providing


less optimal sunlight conditions for crop development and, in some areas, by
allowing less time for picking the mature crop before clearing the field for the
following crop. Sowing delays are caused either by the late arrival of seasonal
rainfall needed for sowing or by delays in harvesting the preceding crop. Yield
losses associated with late sowing and shortened harvest times may be reduced
by new shorter duration varieties and better management, but crop competition
will likely continue to limit yields in some areas.

Monsoon Dependence.Erratic

monsoon rainfall affects 60-70


percent of cotton area, reducing yields through moisture stress and creating risk
Page 48

that reduces investment in seed, fertilizer, and pesticide inputs. Even with
improved varieties and management, average yields in the mostly rainfed
Central and South zones are likely to remain below those achieved in other
countries with more reliable rainfall.

Poor Seed Quality.

Poor seed quality is a pervasive problem in


cotton cultivation. Only about 35 percent of cotton area is sown with certified
seed with assured varietal purity and germination. Commercially available seeds
are often of poor quality, with sale of uncertified, substandard, and second
generation (F2) hybrid seeds not uncommon. Although supplies of certified seed
are generally available, financial constraints lead most farmers to use retained
seeds or lower priced uncertified seeds from the market.
The proliferation of cotton varieties in markets and farmers fields confounds
efforts to improve seed quality, maintain varietal purity, and improve crop
management practices. Roughly 100-130 cotton varieties developed in both the
public and private sectors are now cultivated in India. A study by the Central
Institute for Cotton Research (CICR) indicates that the average cotton farmer
11
in the Central and South zones plants 3-4 varieties on farms averaging about 2
hectares, a practice that greatly complicates crop and seed management.

Plant Protection.Insect

and disease infestations, including


bollworms, white fly, jassids, and leaf curl virus, are significant problems in
Indias three cotton production zones. Although per hectare use of pesticides is
higher for cotton than for any other crop, effective plant protection is
constrained by poor farm management, pesticide subsidies that encourage
indiscriminant use, and problems with pesticide quality. Improved onfarm pest
management practices, including appropriate crop rotations, pest surveillance,
pesticide applications, and adoption of Integrated Pest Management (IPM)
practices have proved difficult to implement on small, resource- constrained
farms.

Crop Management.Large gaps between average on farm yields and


the potential of existing varieties also stem from poor management practices,
including use of inappropriate varieties, seed rates, seed spacing, and fertilizer
dosages. As in the case of plant protection, improvement of crop management
practices is complicated by the need to extend recommended practices to large
numbers of small, limited-resource farmers.
Page 49

Lack of Suitable Varieties.Cotton yields are affected by lack of


varieties or genotypes suitable for some agronomic conditions. Indian
scientists cite three priorities for plant breeding efforts: (1) higher yielding,
short-duration, and pest-resistant cultivars for the irrigated North zone, (2)
higher yielding varieties for the drought-prone Central zone, and (3) varieties
suited for the soils on rice fallow common in the South zone.

Water Management issues


Water resources need to be protected from unsustainable use and pollution
between 1970 and 1995, 25% of the worlds freshwater ecosystems were lost.
Agriculture takes up about 69% of global freshwater withdrawal and rice, wheat
and cotton together account for 58% of the worldwide irrigated area, making
these three crops the major consumers of freshwater (WWF, 1999).
Approximately 73% of cotton is produced in irrigated fields and only 27%
under rain-fed conditions. Most irrigation systems in cotton production rely on
the technique of flood irrigation freshwater is drawn from its source and
transported to the place of its consumption. Losses of freshwater can occur
through evaporation, seepage and poor water management.
Water losses can be drastically cut through good water management practices
which are integral to the farming approach taken in the Fairtrade cotton standard
including input of organic matter, crop rotation, and appropriate irrigation
methods (if needed). In areas of water shortage, appropriate measures should be
taken to improve water storage and collection systems.
Bt cotton issue
Bt cotton is one of the variety of cotton which gives the lager yield and the less
quantity of pesticides are needed because of its inbuilt pest resistance capacity.
But the research was carried out and it was found that the cotton growers who
are using the Bt cotton at their farm need to use more the amount of pesticides
compared to the other normal cotton growers after third year of the Bt cotton
and the yield of the cotton goes down compared to the normal cotton growers.
So it has a major impact on the cotton growers and also the resistance of the
insect increases with the frequent use of Bt cotton.

Water Pollution
Large quantity of water is used at various stages of the cotton textile from
Cotton farming to cotton finishing. Water gets polluted due to excess use of
pesticides in the cotton faming. During rainy season these excess pesticides gets
Page 50

mixed with the surface water as well as the ground water intern causing the bad
effect on the human health as well as the aquatic life.

Soil Pollution
Soil in the cotton growing region and near by region is getting polluted because
of the excessive use of the chemical pesticides resulting into the low yield. This
can be avoided by using the organic pesticides for growing the cotton.

Pollution due to Lint


The pollution due to lint in the cotton ginning industry is very hazardous to
health. Most of the worker working at this place suffers form the lungs diseases
because of the pollution problems.

Page 51

STEEPLED
ANALYSIS
OF
BANGLADESH
Page 52

5.1 SOCIAL FACTORS :


Gender impact

Rural women in several smallholder contexts provide substantial labour input


to most aspects of cotton production cycle, frequently as unpaid family labour
or low-paid day-labourers and commonly performing some of the most
arduous tasks with over-representation in manual work such as picking.

Women in many regions face significant difficulties in gaining access to input


credit facilities, due principally to mens ownership of land and other assets,
and hence struggle to achieve economic independence through cotton farming.
Decision-making within farming families in many regions is gender-biased and
women are often neglected in decision-making process. Because of the above,
and the increased labour requirements of more ecologically sound farming
cultivation methods, the development of such methods may risk an increase in
the labour burden on rural women workers.

Health and safety

Given the nature of cotton farming work, worker/farmer health and safety is a
critical issue in cotton cultivation: the key risks are that workers family or
hired, depending on regional context are exposed to harmful toxins,
primarily because they are not provided with or do not wear adequate
personnel protective equipment (PPE) while spraying chemical pesticides and
herbicides.

Page 53

Children are particularly vulnerable to arduous work on cotton farms;


however, there are few reports of children working with toxic materials.

In the context of worker health and safety, special attention should be given to
working conditions in ginneries work characterised by seasonality, dust
pollution, machine danger and long hours, albeit with differences between
regions

Child labour

In several regions, children including young children contribute labour to


cotton growing; depending on the age of the child and the nature of the activity
particularly whether it affect the childs health and schooling this may or
may not be acceptable under international standards (ILO conventions provide
for light work for over-12s and make exception for childrens work on family
smallholdings where produce is for local consumption)

Children are primarily involved in cotton picking, and to a lesser degree in


weeding and nutritional activities.

Key issues are childrens health and safety, and access to education (though the
latter may depend on factors outside the control of parents, such as availability
of local facilities).

Child labour is difficult to assess and monitor as it is (almost by definition)


informal

Forced labour / labour coercion


Forced labor constitutes a violation of a fundamental international human right
freedom of employment and there are few cultural relativities in the debate
surrounding its continued use.
The underlying factors that contribute to forced labor and bonded labor include
the use of labor intermediaries providing casual labor under conditions which
compromise the workers rights, recruitment agencies with service fees which
can be repaid only by continued work, social exclusion, often connected to caste
or tribe, asymmetric information, whereby illiterate workers are not aware of
their rights, labor migration particularly irregular migrant workers, who are
commonly unaware but also unable to assert their legal labor rights, as nonregistered workers, inequitable loan or credit schemes managed by the
Page 54

employer; in-kind remuneration, which allows employers to exacerbate


dependent relations and hide low wages

5.2 ENVIRONMENTAL FACTORS :


The state governments are authorized to grant environmental clearances to the
stand alone grinding unit. For the purpose of environmental clearances, port
based/inland bulk handling terminal should be treated at per with the stand
alone grinding units and state governments should be authorized in this regard.
Those targets if achieve will transform the socioeconomic environments. Along
with upper per capita income the governments vision 2021 presents a growth
where citizens will have a top standard of living be better-educated, face better
social justice, and have a more equitable socioeconomic environment and the
sustainability of growth will be ensured through better protection from climate
change and natural disaster.IDA commitments to Bangladesh have growth
extraordinarily in the past five years, topping $1 billion for the first time in FY
2009. The world Banks presents collection in Bangladesh amount to $4.2 billion
and includes 32 projects. The world Banks country support strategy for FY-1114 is supporting the governments vision of quick poverty reduction through
sustainable accelerate, and comprehensive growth, underpinned by stringer
governance at central and local level. To ensure better outcome the world banks
plan seeks to scale up incomplete operations with provable results, connect in
strategic interventions with a transformative impact and innovate through small
pilots with high country ownership.
Page 55

Low Yields in Cotton


The relatively rapid gains in productivity in the predominately rainfed Central
zone since 1990 are due to technological advances that, if combined with a
continuation of recent modest growth in the North and South zones, could lead
to a substantial hike in national average yields and production.
While this productivity gap indicates that significant further onfarm yield
improvements are possible, a range of technical, economic, and institutional
factors prevent realization of the potential of the varieties cultivated
Following are the few factors which contributes towards the low yield

Delayed Sowing.

Late sowing of cotton reduces yields by providing


less optimal sunlight conditions for crop development and, in some areas, by
allowing less time for picking the mature crop before clearing the field for the
following crop. Sowing delays are caused either by the late arrival of seasonal
rainfall needed for sowing or by delays in harvesting the preceding crop. Yield
losses associated with late sowing and shortened harvest times may be reduced
by new shorter duration varieties and better management, but crop competition
will likely continue to limit yields in some areas.

Monsoon Dependence.Erratic

monsoon rainfall affects 60-70


percent of cotton area, reducing yields through moisture stress and creating risk
that reduces investment in seed, fertilizer, and pesticide inputs. Even with
improved varieties and management, average yields in the mostly rainfed
Central and South zones are likely to remain below those achieved in other
countries with more reliable rainfall.

Poor Seed Quality.Poor

seed quality is a pervasive problem in


cotton cultivation. Only about 35 percent of cotton area is sown with certified
seed with assured varietal purity and germination. Commercially available seeds
are often of poor quality, with sale of uncertified, substandard, and second
generation (F2) hybrid seeds not uncommon. Although supplies of certified seed
are generally available, financial constraints lead most farmers to use retained
seeds or lower priced uncertified seeds from the market.
The proliferation of cotton varieties in markets and farmers fields confounds
efforts to improve seed quality, maintain varietal purity, and improve crop
management practices. Roughly 100-130 cotton varieties developed in both the
Page 56

public and private sectors are now cultivated in India. A study by the Central
Institute for Cotton Research (CICR) indicates that the average cotton farmer

in the Central and South zones plants 3-4 varieties on farms averaging about 2
hectares, a practice that greatly complicates crop and seed management.

Plant Protection.Insect

and disease infestations, including


bollworms, white fly, jassids, and leaf curl virus, are significant problems in
Indias three cotton production zones. Although per hectare use of pesticides is
higher for cotton than for any other crop, effective plant protection is
constrained by poor farm management, pesticide subsidies that encourage
indiscriminant use, and problems with pesticide quality. Improved onfarm pest
management practices, including appropriate crop rotations, pest surveillance,
pesticide applications, and adoption of Integrated Pest Management (IPM)
practices have proved difficult to implement on small, resource- constrained
farms.

Crop Management.Large gaps between average onfarm yields and


the potential of existing varieties also stem from poor management practices,
including use of inappropriate varieties, seed rates, seed spacing, and fertilizer
dosages. As in the case of plant protection, improvement of crop management
practices is complicated by the need to extend recommended practices to large
numbers of small, limited-resource farmers.

Lack of Suitable Varieties. Cotton yields are affected by lack of


varieties or genotypes suitable for some agronomic conditions. Indian
scientists cite three priorities for plant breeding efforts: (1) higher yielding,
short-duration, and pest-resistant cultivars for the irrigated North zone, (2)
higher yielding varieties for the drought-prone Central zone, and (3) varieties
suited for the soils on rice fallow common in the South zone.

Water Management issues


Water resources need to be protected from unsustainable use and pollution
between 1970 and 1995, 25% of the worlds freshwater ecosystems were lost.
Agriculture takes up about 69% of global freshwater withdrawal and rice, wheat
and cotton together account for 58% of the worldwide irrigated area, making
these three crops the major consumers of freshwater (WWF, 1999).
Approximately 73% of cotton is produced in irrigated fields and only 27%
Page 57

under rain-fed conditions. Most irrigation systems in cotton production rely on


the technique of flood irrigation freshwater is drawn from its source and
transported to the place of its consumption. Losses of freshwater can occur
through evaporation, seepage and poor water management.
Water losses can be drastically cut through good water management practices
which are integral to the farming approach taken in the Fairtrade cotton standard
including input of organic matter, crop rotation, and appropriate irrigation
methods (if needed). In areas of water shortage, appropriate measures should be
taken to improve water storage and collection systems.

But cotton issue


Bt cotton is one of the variety of cotton which gives the lager yield and the less
quantity of pesticides are needed because of its inbuilt pest resistance capacity.
But the research was carried out and it was found that the cotton growers who
are using the Bt cotton at their farm need to use more the amount of pesticides
compared to the other normal cotton growers after third year of the Bt cotton
and the yield of the cotton goes down compared to the normal cotton growers.
So it has a major impact on the cotton growers and also the resistance of the
insect increases with the frequent use of Bt cotton.

Water Pollution
Large quantity of water is used at various stages of the cotton textile from
Cotton farming to cotton finishing. Water gets polluted due to excess use of
pesticides in the cotton faming. During rainy season these excess pesticides gets
mixed with the surface water as well as the ground water intern causing the bad
effect on the human health as well as the aquatic life.

Soil Pollution
Soil in the cotton growing region and near by region is getting polluted because
of the excessive use of the chemical pesticides resulting into the low yield. This
can be avoided by using the organic pesticides for growing the cotton.

Pollution due to Lint


Page 58

The pollution due to lint in the cotton ginning industry is very hazardous to
health. Most of the worker working at this place suffers form the lungs diseases
because of the pollution problems.

5.3 TECHNOLOGICAL FACTORS :


Bangladesh and india are the top two textile producers in the world . The
proceeds from textile and apparel exports have contributed greatly to the
economic development of both countries. Millions of jobs are created in the
related sectors. The continuous development of the textile industry is thus vital
to both countries socio-economic health. Interestingly, textile enterprises in
Bangladesh and India have adopted quite deferent business models and have
followed divergent growth tracks.Through comparison of the textile industries
India and Bangladesh, this paper aims to demonstrate the various technological
evolution dynamisms in both countries and explore the reasons behind them.
Before the analysis, it should be pointed out that technological innovations do
not always refer to automation for high-tech. Sometimes enterprises may simply
reorganised productions producers to increases the workers productivity.
Structural and organisational changes are innovations too. Every countries has
its own unique experience in establishing and developing new business models,
in which the factors of post, productivity, quality , technology and design are
adjusted according to market demands and the enterprises capacity. These
improvements may be based on upgrading hardware, but often they are just the
results of better managements of the existing technology. The booming
Bangladesh and Indian textile and appealer industries show us detailed , multifaceted technological developments in their specific and historical and social
context.
Page 59

Technology Improvement and Adaptation


The aforementioned characteristics describe the general trends of technology
management in the textile and apparel companies in Bangladesh so far. In
specific development phases and concrete enterprises, more varieties of
developing approaches and strategies can be observed. These are continuous
experiments for technological improvement , however, development is always a
try-and-fail-process. The final success of the technological transformation
usually means the adaptation of technology into the local social and market
circumstances. Thus, there are also various development tracks in Bangladesh
lately with the arrivals of new technologies.

5.4 ECONOMIC FACTORS


Prices of Cotton
The Minimum Support Prices of Kapas (Seed cotton) for fair average quality
announced for the cotton season 2005- 2006 (Oct Sept), was fixed at last
years level (2004-05) i.e. Rs.1760/- per quintal for medium staple variety (F414/J-34/H- 777). The support price for H-4 (Long staple variety) has been
fixed at Rs.1980/ - per quintal, an increase of Rs.20/- per quintal over support
price of 2004-05. The MSP fixed for F-414/H-777/J-34 variety of Kapas will be
applicable only to Rajasthan. The price of this variety, grown in Haryana and
Punjab has been fixed keeping in view the respective quality differential, vis-vis Rajasthan, obtaining in these States.
The Cotton Corporation of India Ltd. (CCI) undertook massive MSP operations
through out 2004- 05 in all the cotton growing states, and procured kapas
equivalent to lint cotton of 27.52 lakh bales. In 2004-05, due to favourable
seasonal conditions, there was a sharp rise in productivity, which peaked to a
record 463 Kg. Lint/hectare, as compared to 399 kg. / lint per hectare during
2003-04, the ultivated area increased to 89.20 lakh hectares in 2004-05, as
compared to 76.30 lakh hectares in 2003-04, and the production touched 243
lakh bales in 2004-05, as compared to 179.00 lakh bales in 2003-04.

Page 60

5.5 POLITICAL FACTORS:


Bangladesh is rapidly changing as a dominant two-party system; BPN (center
Right) and awami league (center left), to a very belief liberation movement. In
short, Bangladesh has a parliamentary democracy.

PARTIES IN BANGLADESH
Bangladesh

awami league

The

Bangladesh Nationality party (BNP)

The

Bangladesh jamat-e-islami(BJI)

5.6 LEGAL FACTORS :


TAXATION POLICY
In Bangladesh, the principal direct taxes are personal income taxes and
corporate income taxes, and a value-added tax of 15% levied on all important
consumer goods. The tax rate for characters in 25%. For the 2011-12 tax year
starting from 1 july, 2011 & ends on 30 june,2012 the upper corporate rate was
45%. However, publicly traded companies registered in Bangladesh are charged
a lower rate of 27.5%. Bank, financial institutions and insurance companies are
charged the 45% rate. All the other companies are taxed at the 37.5% rate.
The constitution of Bangladesh was draft in the year of 1972 and has undergone
15 amendments. The utmost judicial body is the Supreme Court and justice are
selected by the president and the judicial & law enforcement institute are feeble.
Separation of powers judicial from executive was finally implemented on1st
November, 2007. It is expected that this separation will make the judicial
stronger & impartial. Law are loosely based on English general law family laws
such as marriage & inheritance are based on religious scripts ,& therefore differ
between religious communities.
Page 61

STEEPLED
ANALYSIS
OF
Page 62

COTTON TEXTILE
INDUSTRY

6.1 SOCIAL FACTORS :


Textile industry of India based on cotton and cotton as the agricultural product,
which found in rural areas so the social responsibility of the textile industry.
Social stratification plays a vital role in rural societies. India is a culture include
wide subculture families from these subcultures are having their own norms,
beliefs, attitudes as well as their different culture of dressing various from
different castle to castle culture to culture. Such as Bengalis wore cotton attire,
gujarati, wear bandhani saris etc many more are there.

6.2 TECHNOLOGICAL FACTORS :


The government has undertaken series of progressive messures like introduction
of technology mission on cotton (TMC) technology upgradation found schemes
for integrated textile park (SITP), reduction in customs duty on import of state
of the art machinery, debt restructuring schemes,setting up of apparel training
and design center(ATDCS), 100% foreign direct investment in the textiles
sector under automatic route, setting up of national institute of fashion
technology(NIFT) etc,for upgrading and strengthening the textiles sector in
Page 63

india. At present, the textiles industry is under going a substaintial reorientation


towards other then clothing segments of textile sector, which is commonly
called as technical textile.

6.3 ECONOMICAL FACTORS :


Textile exports are targeted to reach $50 billion by 2010, $25 billion of which
will go to the US. other markets include UAE, UK, Germany, France, Italy,
Russia, Canada, Bangladesh and Japan.the name of these countries with their
background can give thousands of insights to the thinking mind. The slant cut
that will be producing a readymade garment will a sell at a price of 600 Indian
rupees, making the value addition to be profitable by 300%.

6.4 POLITICAL FACTORS


The centralized corrupt inefficient state structure is a hindrance to development.
There is limited accountability and transparency, which has created a breeding
ground for corruption and a growing mistrust from the public. The public
administration also lacks financial and adequate human resource to perform its
duties. Which indirectly affects the textile manufacturing business as all the
business includes human being in it.

6.5 LEGAL FACTORS


Due to many legal policy trading in the textile factor has been liberalized such
as by publicly traded companies traded companied registered in Bangladesh are
charged rate of 27.5%. Banks, Financial institution and insurance companies are
charged the 45% rate. All other companies are taxed at the 37.5% rate.

6.6 ENVIRONMENTS FACTORS


Page 64

The state governments are authorized to grants environments to the stand alone
grinding units. For the purpose of environments clearances, port based/inland
bulk handling terminal should be treated at per with the stand alone grinding
units and state governments should be authorized in this regard.

PORTERs
FIVE FORCE MODEL
OF

Page 65

COTTON TEXTILE
INDUSTY

One of the worst hit sectors during the skyrocketing interest rate scenario in the
late 90s and early 2009s, the debt-laden Indian Cotton Textile Industry has
spun many turn-around stories since the+n. Aided by lower interest rates,
restructuring packages from financial institutions and the recent dismantle of
quotas, the sector is today well poised to capture growth opportunities. In 2015,
the sector contributed 20% to industrial production, 9% to excise collections,
18% of employment in industrial sector, nearly 20% to the country's total export
earnings and 4% to the GDP. The textile sector employs nearly 35 m people and
is the second highest employer in the country. Infect, it is estimated that one out
of every six households in the country directly or indirectly depend on this
sector. Here we analyse the sector's dynamics through Porter's five-factor
model.

Page 66

7.1 Bargaining power


(demand scenario) :

of

customers

Global textile & clothing industry is currently pegged at around US$ 440 bn.
US and European markets dominate the global textile trade accounting for 64%
of clothing and 39% of textile market. With the dismantling of quotas, global
textile trade is expected to grow (as per Mc Kinsey estimates) to US$ 650 bn by
2010 (5 year CAGR of 10%). Although China is likely to become the 'supplier
of choice', other low cost producers like India would also benefit as the overseas
importers would try to mitigate their risk of sourcing from only one country.
The two-fold increase in global textile trade is also likely to drive India's
exports growth. India's textile export (at US$ 15 bn in 2005) is expected to grow
Page 67

to US$ 40 bn, capturing a market share of close to 8% by 2010. India, in


particular, is likely to benefit from the rising demand in the home textiles and
apparels segment, wherein it has competitive edge against its neighbour.
Nonetheless, a rapid slowdown in the denim cycle poses risks to fabric players.

7.2 Bargaining
Power
of
Suppliers :

India is the third largest producer of cotton in the world after China and US and
has the largest area under cultivation. Cotton, a key raw material in the textile
and garment industry, accounts for about 30% of the fabric cost and 13% of the
garment cost. India has an abundant supply of locally grown long staple cotton,
which lends it a cost advantage in the home textile and apparels segments. Other
countries, like China and Pakistan, have relatively lower supply of locally
grown long staple cotton. Moreover, low cotton prices due to a bumper cotton
crop would enable India to lower its production cost and sustain pricing
pressure. Further, efforts on improving the yield per hectare would ensure
higher productivity and production, thereby providing the much-needed security
of raw-material supply to textile producers.
India also enjoys a significant lead in terms of labour cost per hour (US$ 0.6 in
2004), over developed countries like US (US$ 15.1) and newly industrialised
economies like Hong Kong (US$ 5.1), Taiwan (US$ 7.1), South Korea (US$
5.7) and China (US$ 0.9). Also, India is rich in traditional workers adept at
value-adding tasks, which could give Indian companies significant margin
advantage.

7.3 Threat of new entrants:


In the quota free regime, capacity expansion is the name of the game in the
textile sector. Resultantly, smaller players who cannot venture into the global
markets are flooding the domestic markets with excess supply, thus weakening
the pricing scenario. Be it denim (Arvind Mills), home textiles (Welspun and
Page 68

Alok Industries) or branded apparels (Raymond), new capex and consolidation


with international players is also not likely to safeguard margins for the larger
players, unless they can tap a significant pie of the overseas markets.

7.4 Threat of substitutes :


Low cost producing countries like Pakistan and Bangladesh (labour cost 50%
cheaper) are also posing a threat to India's exports demand. Infect, players like
Arvind Mills have already started feeling the pinch as overseas buyers have
started shifting to 'alternative sources', thus impacting their incremental volume
off-takes.

7.5 Comptitive rival :


India's logistic disadvantage due to its geographical location can give it a major
thumbs-down in global trade. The country is distant from major markets as
compared to its global competitors like Mexico, Turkey and China, which are
located in relatively close vicinity to major global markets of US, Europe and
Japan. As a result, high cost of shipments and longer lead-time coupled with
lack of infrastructure facility may prove to be major hindrances.
The fragmented structure of the industry has also stood in the way of achieving
true integration between the various links in the supply chain. The sector has
one of the longest and most complex supply chains in the world, which the
larger players are trying to correct by integrating their operations and improving
efficiency levels.
Textiles being a fairly regulated sector till the recent past (quota regime),
another indispensable leg of the above analysis is government regulations.
Page 69

Technology Upgradation Fund Scheme (TUFS) was launched in FY99 for a


period of five years (later extended up to FY07) to promote the upgradation of
the textile and jute industry. The scheme aimed at providing loans to the sector
at internationally comparable rates of interest (5% lower than the domestic
interest rates), which enabled the players to upgrade their technology at lower
cost of capital. Establishment of 'Apparel Export Parks' and fiscal incentives in
the recent budgets also indicate the government's resolve to aid the sector's
growth and international competitiveness.
As one can comprehend from the above analysis, the potential for the sector's
growth are ample, but the trick lies in competing effectively against rivals.
Consolidation of the industry and delivery of better quality at effective rates and
minimum lead time would certainly help the players surmount all competitive
pressures.

PORTERS
FIVE FORCES
ANALYSIS
OF
Page 70

BANGLADESH
COTTON TEXTILE
INDUSTRY

Page 71

8.1 Competitive Rivalry between Existing


Players :
Bangladesh is the 6th largest apparel and textile supplier in the US & EU
market. It is shaping itself as a potential market player by providing the most
quality with the cheapest price possible. Whilst the market is controlled by the
bigger players like China and India, the role of Bangladesh is still important.
Among the very few suppliers, Bangladesh imports most of its raw materials,
but utilizes other factors of production to produce in a cheaper manner. It offers
investment friendly atmosphere for the brand names to outsource their
production process in Bangladesh. Bangladesh is putting up a show against
other
competitors
like
China
and
India.
Page 72

by providing available cheap labor. It has been facing tremendous growth even
after thealleviation of the quota from the US market. This is due close customer
relationship and quality production. Bangladesh has this advantage against its
rivals. Bangladesh is one of those countries who cannot fulfil its quota provided
by the larger markets. As a result of that, many foreign companies are merging
in to use Bangladesh as a hub to prepare their product by outsourcing in
Bangladesh and then gaining entrance to markets which were previously
unavailable to them. Bangladesh is taking advantage of this and inviting
investors, and foreign companies to place orders to attain this facility. It should
focus on placing more orders instead of making its export rates efficient and
strong

8.2 Bargaining Power of Suppliers :


Bangladesh has always been enjoying the upper hand in ordering its inputs from
it suppliers. Bangladesh has very few input or raw materials of its own. Most of
them are imported. Although this leads to a problem in reducing the opportunity
to initiate back ward linkage, and thus increasing the supplier power,
Bangladesh still manages to acquire the inputs at world price from its
suppliers.But the most importing aspect of Bangladeshs export industry would
always be theenthusiasm and the prospect of growth it provides to the
stakeholders in terms of successand prosperity. Bangladeshs domestic
suppliers power is increasing in a slow but steadymanner as more and more
local companies are stepping up to the task. They are creating an integrated
system of supply channel management by which the manufacturers work load
isreduced. Companies are more prone to order through local suppliers who
themselves apply to the task of importing raw materials and components
necessary for the production process. And the favourable attitude of the
government is also helping this growth. The back to back LC process was
approved by the government to facilitate the growth of the industry. Bangladesh
has a good reputation in terms of timely payment to the suppliers. This
reputation is helping create a longer term relationship with the suppliers
(foreign) and is also giving the local firms initiative to step into the supply
chain. Bangladesh gives the suppliers a large scale advantage as the industry is
quite concentrated in area basis. A good global reputation is helping Bangladesh
match the price with international quoting with the suppliers both foreign and
local ones. Suppliers although having a sort of upper hand over Bangladesh,
Page 73

also regard Bangladesh as a reliable source of repayment. This reputation has


been helping Bangladesh to ensure prompt supply of raw goods

8.3 Bargaining Power of Customers :


Bangladeshi manufactures realize that the buyer possess more power than
themselves.Chinas lead and Indias march to thetop keep the Bangladeshi
manufacturers/ suppliers on their toes. Bangladesh is providing a large space of
choice to the provider in terms of quality and cost. It is offering the lowest
possible
production
price
and
also
work
that
is best in quality. Due to high switching opportunities for the customers, Bangl
adesh has to perform or allow the customers to win in many cases. Bangladesh
plans to use cost-effectiveness to present itself as the best option to the buyers.
The important factor here is that many of the companies in Bangladesh are
either franchises or subsidiaries. Along with them the local companies are
giving
Bangladesh
a
look
of
the best outsourcing place of the lot. Many of the reputed companies, brands ar
e outsourcing their products in Bangladesh as they get the most quality in the
cheapest price possible. Buyers are also interested in the growth aspect of the
Bangladeshi suppliers. Bangladesh is growing as a major player in the textile
and apparel industry globally and due to the quota system it is quite an
important player in the field. Bangladesh still has its quota left in the EU market
where countries like China dont have the entry. So, many countries are
planning to use Bangladesh as a hub and buy the service to export under its lab
el. That gives Bangladesh a comparative advantage against the buyers of its
services. And due to immense quality assurance, Bangladesh is continuing to be
the best choice for many buyers in the industry.

8.4 Threat of New Entrants :


Bangladesh has yet to reach economies of scale in terms of production. Thus it
allows potential entrants to pose a threat to its growth. But again, if we just
analyse the growth of textile and RMG sector, this threat might seem negligible.
Page 74

Textile in Bangladesh is in agrowing stage. Its growing in a rapid pace and is


posing itself as an entrant to the moreestablished players. Thus the threat of new
entrants is quite minimal to its concern.Moreover, new entrants would have to
gain an advantage against Bangladesh whose growth ratio is almost 20% per
year even after the MFA. A newer entrant would thus cause fewer troubles to
Bangladesh. The greatest advantage that Bangladesh has right now is its cheap
labour. Cheap labour would continue to be available until the living standards
go up. Till that happens, labours will have low rates in terms wages and keep
Bangladesh safe from any sort of new entrants. One factor has to be kept in
mind that, due to the unstable political scenario in recent years, investors and
foreign firms are reluctant in investing in Bangladesh. Using this opportunity,
countries like Sri Lanka and other small Latin American countries can steal
away potential buyers from Bangladesh.

8.5 Threat of Substitutes :


Bangladesh, in terms of substitutes, plays both the roles of an affected and an
opportunist. China and India are growing their customer base at a higher pace
than Bangladesh. This is due to poor country branding, and less power to
influence customers. Due to these reasons, customers sometimes prefer China or
India to Bangladesh. More to add, Bangladeshi products are being substituted
due to lack of supplier power andgovernments reputation. Many firms, buyers,
investors are now hesitating to invest in Bangladesh due to unstable political
scenario. Thus the opportunity for Bangladesh is being substituted to either
China or India. Also, the substitute cost is not that high for buyers to switch to a
Chinese producer or even to a Sri Lankan producer. On the other hand, due to
the lower production cost, Bangladesh plays a major role in substituting the
Chinese and Indian manufacturers. This opportunity has to be nurtured by the
Bangladeshi industry to ensure its growth and profitability. Bangladesh possess
the ultimate weapon of cheap labour and thus at times, it has to use it to
substitute opportunities from its competitors.

Page 75

EXPORT
POLICY
OF
INDIA

Page 76

9.1 EXPORT Policy in India:

Page 77

Additional benefit of 2% bonus, over and above the existing benefits of


5% / 2% under Focus Product Scheme, allowed for about 135 existing
products.

256 new products added under FPS (at 8 digit level), which shall be entitled
for benefits @ 2% of FOB value of exports to all markets.

Tea and CSNL Cardinol included for benefits under VKGUY @ 5% of


FOB value of exports.

Zero duty EPCG scheme, introduced in August 2009 and valid for only two
years upto 31.3.2011, has been extended by one more year till 31.3.2012.

Duty Entitlement Passbook (DEPB) scheme has been extended beyond


31.12.2010 till 30.06.2011.

Concessional Export Credit: Interest subvention of 2% for pre-shipment


credit for export sectors namely, Handloom, Handicraft, Carpet and SMEs
for all export sectors.

Exporters shall now have the flexibility to get a high value EPCG
authorisation by filing their EPCG application on Annual basis.

Clarification on the availability of 4% SAD refund benefit.

Facility of a data preparation module for Advance Authorization and Export


Promotion Capital Good (EPCG) has been provided on an offline mode.

Finished Leather export shall be entitled for Duty Credit Scrip @ 2% under
FPS.

Duty free import of specified trimmings, embellishments etc. shall be


available on Handloom made-ups exports @ 5% of FOB value of exports.

Readymade Garment sector granted enhanced support under MLFPS for a


period of further 6 months

9.2 OBJECTIVES OF EXIM POLICY :

Page 78

To facilitate sustained growth in exports from India and import in India.

To stimulate sustained economic growth by providing access to essential


raw materials, intermediates, components, consumables and capital goods
scheme required for augmenting production and providing services.

To enhance the technological strength and efficiency of Industry


Agriculture industry and services, thereby improving their competitive
strength while generating new employment opportunities, and to encourage
the attainment of internationally accepted standards of quality.

To provide clients with high-quality goods and services at globally


competitive rates. Canalization is an important feature of Exim Policy
under which certain goods can be imported only by designated agencies.
For an example, an item like gold, in bulk, can be imported only by
specified banks like SBI and some foreign banks or designated agencies.

The Government of India notifies the Exim Policy for a period of five years
(1997-2002) under Section 5 of the Foreign Trade (Development and
Regulation Act), 1992. The current policy covers the period 2002-2007. The
Export Import Policy is updated every year on the 31st of March and the
modifications, improvements and new schemes became effective from 1st April
of every year.
All types of changes or modifications related to the Exim Policy is normally
announced by the Union Minister of Commerce and Industry who co-ordinates
with the Ministry of Finance, the Directorate General of Foreign Trade and
its network of regional offices.

Page 79

9.3 POLICY AND REGULATORY


FRAMEWORK TOWARD FDI :
The Government has put in place a policy framework on Foreign Direct
Investment. which is embodied in the Circular on Consolidated FDI Policy,
issued which is updated every six months, to capture and keep pace with the
regulatory changes. The Department of Industrial Policy and Promotion (DIPP),
Ministry of Commerce & Industry, Government of India makes policy
pronouncements on FDI through Press Notes/ Press Releases which are notified
by the Reserve Bank of India as amendments to the Foreign Exchange
Management (Transfer or Issue of Security by Persons Resident Outside India)
Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000).
The procedural instructions are issued by the Reserve Bank of India vide A.P.
DIR. (series) Circulars. Thus, regulatory framework for FDI consists of Acts,
Regulations, Press Notes, Press Releases, Clarifications, etc.
FDI policy is reviewed on an ongoing basis and measures for its further
liberalization are taken. Change in sectoral policy/sectoral equity cap is notified
from time to time through Press Notes by the Department of Industrial Policy &
Promotion. Policy announcement by DIPP are subsequently notified by RBI
under FEMA

Page 80

9.4 POLICIES OF FDI :


100% FDI allowed in medical devices

FDI cap increased in insurance & sub-activities from 26% to 49%


100% FDI allowed in the telecom sector.
100% FDI in single-brand retail.
FDI in commodity exchanges, stock exchanges & depositories, power
exchanges, petroleum refining by PSUs, courier services under the government
route has now been brought under the automatic route.
Removal of restriction in tea plantation sector.
FDI limit raised to 74% in credit information & 100% in asset reconstruction
companies.
FDI limit of 26% in defence sector raised to 49% under Government approval
route. Foreign Portfolio Investment up to 24% permitted under automatic route.
FDI beyond 49% is also allowed on a case to case basis with the approval of
Cabinet Committee on Security.
Construction, operation and maintenance of specified activities of Railway
sector opened to 100% foreign direct investment under automatic route.

Page 81

IMPORT
POLICY
OF
Page 82

BANGLADES

10.1 IMPORT POLICIES IN


BANGLADESH :

What is Import :

Import trade of Bangladesh is controlled under the Import & Export control Act
(IEC) 1950. Authorized Dealer Banks will import the goods into Bangladesh
following import policy, public notice, F.E circular & other instructions from
competent authorities from time to time.
Definition on Import:
Buying of goods & services from foreign countries for sales is considered as
import. The person or organization who import the goods & services from
foreign countries is known Importer and from which goods & services are
imported is known as Exporter. In case of Import, the importers are asked by
their Exporters to open a Letter of Credit (L/C). So that there payment against
goods & services is ensured.

Page 83

10.2 GENERAL PROVISION FOR


IMPORT :
Regulation of Import Import of goods under this order shall be regulated as
under:
Banned list: Banned goods are not allowed to import through the foreign
exchange transaction. Such as Live Swine, Eggs of shrimps and prawns etc.
Restricted list: Any item, which is restricted by the Import Policy Order
1997-2002 in Annexure 1(b) shall be importable only on fulfillment of the
conditions (b) specified therein against the item.
Free Importable Items: The items which are not included either in the Banned
list or Restricted list shall be freely importable:
In addition to the conditions mentioned in the Restricted and Banned Lists the
conditions restrictions and procedures for import of various items mentioned in
the test portion of this Order, shall as usual apply in case of import of those
items.

Types of Importer :
Goods are imported for personal use, commercial or industrial purpose. So
there are three kinds of importer such as:
Personal Importer.
Commercial Importer.
Industrial Importer.

Letter of Credit (L/C)


Letter of Credit (L/C) is a payment guarantee to the seller by the issuing bank
on behalf of the importer. In other words, it is a letter of the Issuing Bank to the
Page 84

beneficiary undertaking to effect payment under some agreed conditions. L/C is


called documentary Letter of Credit, because the undertaking of the Issuing
Bank is subject to presentation of some specified documents. Through the L/C
Buyers & Sellers enter into a contract for buying and selling goods/ services and
the buyer instructs his bank to issue L/C in favor of the seller. Here bank
assumes fiduciary function between the buyer and seller.

Import Procedure
To import a person should be an importer. In accordance with Import & Export
Control Act, 1950 the office of chief Controller of Import & Export provides the
registration to the importer. After getting this person has to secure a letter of
credit authorization from Bangladesh Bank. Then he becomes a qualified
importer; He is the person who requests or instructs the opening bank to open an
L/C. He is also called opener or applicant of the Letter of Credit

10.3 Import Registration Certificate


Import Registration Certificates are issued by the office of chief controller of
imports and exports. Intending importers are to submit applications to CCI &
for registration along with required documents are as follows:

Application
Trade License
Nationality Certificate

Page 85

Income tax certificate along with TIN


Bank Certificate
Membership certificate from Trade Association Certificate of incorporation,
Article and Memorandum of Association. Partnership Deed for partnership firm.

10.4
Steps
procedures :

Involved

in

Import

Procurement of IRC from the concerned authority


Signing purchase contract with the seller
Requesting the concerned bank (importers bank) to open an L/C on behalf of
the importer favoring the exporter/seller/beneficiary.
The issuing bank opens/issues the L/C in accordance with the
instructions/request of the importer & request another bank (advising bank)
located in sellers exporters country to advice the L/C to the beneficiary. The
issuing may also request the advising bank to confirm the credit, if necessary.
The advising bank advises the seller that the L/C has been issued.
As soon as the exporter /seller receives the L/C & is satisfied that he can meet
L/C terms & conditions, he is in na position to make shipment of the goods

10.5 Import Procedure:


Import of goods from outside Bangladesh is regulated by the Ministry of
Commerce in accordance with Import & Export (Control) Act, 1950 and the
notification issued thereunder. In terms of the importers, Exporters & indentors
(Registration) order, 1981 no person can import goods into Bangladesh unless
Page 86

he is registered with the chief controller of Import & Export (CCI&E) or


exempted from the provision of the said order. Before any Letter of Credit is
opened or remittance made on behalf of any importer for import into
Bangladesh, Authorized Dealers must verify that the importer is registered with
the CCI&E or otherwise exempted from such registration. Import shall be
allowed only against opening of irrevocable Letters of Credit unless otherwise
authorised by CCI&E in certain exceptional cases as mentioned/ in the Import
Policy order in force.

Future Possibilities For Trading Of Raw


Cotton In Bangladesh

India has promised to supply up to 20 lakh bales of raw cotton to


Bangladesh every year irrespective of any ban that may be imposed on its
exports in future.
There is, however, yet to be an agreement on whether the cotton purchase
pact would be Business-to-Business (B2B) or Business-to-Government
(B2G). While India wants it to be a B2G arrangement, with public sector
procurement agency Cotton Corporation of India canalising the exports,
Bangladesh wants it to be strictly a B2B affair.
Bangladesh feels that it is a lot cheaper to buy it from a private seller
rather than a Government agency and it also takes less time, a Textile
Ministry official told Business Line.
Page 87

But Indias argument is that when there is a ban on exports of the raw
material in the country, the only feasible way to export it would be
through a canalising agency
BTMA AND BGMEA are represent readymade garments sector and there
future possibilities of fabric manufacture, knidwear, the fabric dyes units
are very high. So to sell there raw cotton with high quality will great
opprtuinity for us

References :
http://www.indiaonestop.com/cotton/cotton.htm
http://www.ers.usda.gov
http://www.citiindia.com/industry_overview/india_industry_overview.html
http://cicr.nic.in/
http://www.infodriveindia.com/india-export-data/cotton-raw-cotton-export/fcbangladesh-report.aspx
http://www.business-standard.com/article/markets/cotton-exports-may-fall-by40-114102900590_1.html
WWW.equitymaster.com/detail.asp?
Page 88

Satudytex.blogspot.in/2014
www.agra-net.net
icebusinesstimes.net
www.ers.usda.gov
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www.slidshare.net/iconner/steeple
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