New cess may lead to dip in Indian cotton exports

02 Jul '13

2 min read

The proposal to impose new cess on cotton exporters by the Union Government to create fund for stabilizing the drastic price fluctuation of cotton in the country could lead to dip in exports.

According to the representatives of the cotton industry, imposing cess on exports could have a negative impact on Indian cotton industry since exports will become costlier.

In a conversation with fibre2fashion, president of North India Cotton Association, Mr. Rakesh Rathi said, “Imposing cess on exports of cotton will help local industry as export from India will become costlier. But it will depend upon magnitude of cess. Without studying operation system of fund it is difficult to quantify its role in growth.”

According to Mr. Paresh B Valia, managing director of Asha Cotton Industries, the price fluctuation of cotton mainly depends on consumption, production, demand and supply. “So I think the stabilization fund will not make any change in the fluctuation of Indian cotton price,” he adds.

“In fact, the proposed new fund scheme may have a negative impact on the country’s export market as the buyers are concerned about increase in cotton prices,” he says.

Last week, the Minster of Textiles K Sambasiva Rao said that Indian Government is planning to set up a cotton price stabilization fund by imposing cess on exporters.

This year, India’s cotton exports are likely to touch 10 million bales of 170 kg each, compared to last year’s exports of about 12 million bales.

Earlier, the Cotton Advisory Board estimated India’s cotton exports this year at 8.5 million bales, but the depreciation in the Indian currency vis-à-vis global currencies, including the US dollar, is working in favour of exporters.

Fibre2fashion News Desk - India

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