According to recent data available from several outlets, Bangladesh is set to become the largest importer of cotton from India, beating out China and the US in the process.

Over the past two years, cotton trade between the two neighbours has increased near-exponentially.  A March 2016 report declared a whopping 49% of cotton imports in Bangladesh were from India.

India has produced 6.37m tonnes of lint as of November 2016. In the 2016-2017 fiscal year, ChinaΆs imports from India have fallen to $416.14m while BangladeshΆs imports from India has risen to $613.16m. If the current trend continues in the second half of the fiscal year, then Bangladesh may well become the largest importer of Indian cotton.

ChinaΆs falling demand for Indian cotton can be attributed to a discernible shift from labour-intensive industries due to fluctuating prices, according to the US-based International Cotton Advisory Committee (ICAC). On the other hand, BangladeshΆs booming ready-made garments industry has a constant rise in demand of fabric.

Experts have opined Bangladesh is being courted aggressively by India to beat out regional trade rivals China and Pakistan.

ICAC credits the growth of Bangladesh to its many benefits. Bangladesh is poised to become a regional garment hub because of low costs, availability of semi-skilled manpower, flexible labour regulations, and most importantly, duty-free access to lucrative markets such as Europe and the US due to its status as a least-developed country. It should be noted that India has to pay around 14-32% in duties and taxes when exporting garments to the US, reports Yarnsandfibers.

Global cotton import/export statistics for the 2013-2014 fiscal year ICAC

Though many Bangladeshi importers have complained of Indian exporters missing the delivery schedule and sometimes providing inferior lint, trade has continued to boom.

Earlier in 2016, a joint event was held titled Bangladesh-India Cotton Fest 2016 in Dhaka to promote the increasing cooperation between the two countries.

The cooperation is made evident by several joint ventures between Indian and Bangladeshi firms. For example, Chennai-based apparel manufacturer Rattha Overseas, Jay Jay Mills of Tirupur and Mumbai-based Creative Casuals, among many others, have drawn up plans for sourcing from Bangladesh.

Nitol group and Arvind Mills had signed a contract in 2010 for a denim manufacturing plant Bangladesh which was later scrapped in 2011. Arvind Mills cited “lack of availability of gas” as the reason for backing out.

Global cotton production and consumption for the fiscal year 2013-2014 ICAC

Reports had surfaced of BangladeshΆs suspended GSP (Generalised System of Preferences) facility discouraging the massive joint venture, but were unconfirmed.

At the end of the 2014-2015 fiscal year, the net import value of cotton in Bangladesh was $4.5bn, 8.8% of the global imports, and the second highest globally. India was the second-highest exporter of cotton globally, valued at $7.5bn making up 13.8% of the global exports.

In the 2015-2016 fiscal year, Bangladesh is also the largest cotton importer in the world, with an approximately 18% market share.