India steps in to resolve organic cotton certification issue

India's textile ministry has now come forward to resolve issues over the non-issuance of transaction certificates for organic cotton supplied to Bangladeshi importers.

The country's government in a meeting last Monday requested its cotton suppliers to reach a solution in this regard as soon as possible.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), told The Business Standard, "Gujarat Cotton Corporation contacted us on Wednesday and assured us of finding out a solution to the issue soon." 

"Another supplier has already resolved it," he said, hoping everything will be alright soon.

The secretary to India's textile ministry in a letter to the country's nine exporters said such non-fulfilment of commitment amounts to creating a bad image of the country as a whole and affects bilateral trade relations. 

He, therefore, directed them to resolve the issue amicably with buyers as early as possible. 

On the heels of it, Gujarat Cotton Corporation in a letter to the BTMA on Wednesday said, "We have contacted our buyers by sending a proposal for settling the pending TC issue by email."

The supplier said they never failed to fulfil obligations to buyers before except for the organic TC issue. 

"We have settled 80% of TCs against organic cotton supplies to our buyers. We have suffered heavy financial losses in organic transactions because of price fluctuation, but we have handled the situation. Now, we are willing to settle all pending issues with our buyers." 

Md Ataur Rahman, head of the supply chain (cotton and yarn) at Envoy Textile, told TBS that Indian cotton suppliers have not contacted them yet.

Israq Textile Mills Ltd Managing Director Fazlul Haque told TBS, "An Indian supplier contacted us today and the TC issue has been resolved."

The Business Standard published a report titled "Spinners pay the price of unproven Indian organic cotton" on Wednesday.

According to the importers, for more than one year, nine Indian suppliers have not been giving transaction certificates against 16,100 tonnes of organic cotton imported by 18 Bangladeshi companies against 23 LCs. Certificates were issued to only three importers, which were later revoked as they were fake.

Against this backdrop, last month, the BTMA sent a letter to the Indian High Commission in Dhaka, the Cotton Association of India, the International Chamber of Commerce Bangladesh (ICCB) and other parties concerned, seeking measures to this end. 

According to the BTMA, Bangladesh imported 7.5 million bales of raw cotton in FY20, and more than a quarter of it came from India. But, the BTMA does not have information on the amount of organic cotton imported during this time.