Cotton export should be permitted only from Jan 2011 onwards

05 Oct '10

5 min read

A joint committee meeting of the major Associations TEA, SIHMA, KNITcMA, DAT, TIF, Computer Embroidery Association (CEA), SIIMKA, The Knit Compactors Association and Tirupur Raising Association was held in TEA office yesterday to discuss current scenario in cotton and yarn prices and take further course of action to protect whole garment sector. They have jointly made a representation to Hon'ble Union Minister of Textiles, Thiru.Dayanidhi Maran requesting to take necessary steps to implement the given measures to control the cotton and yarn prices.

We would like to thank the Hon'ble Minister for taking best efforts in the interest of whole textile industry for postponing of the cotton exports to January 2011 in the group of Ministers meeting held on 28th September 2010 and because of your efforts only, it was decided in the meeting to permit cotton exports atleast from 1.11.2010 onwards against the earlier permission for exports from 1.10.2010 and identified the exportable surplus as 55 lakh bales and also decided that there would be not be any registration after the exportable surplus is reached.

Our concern is that even after postponement of cotton exports by one month, the cotton prices has not come down and is still quoted at higher rate. The higher cotton prices are triggering the increasing of cotton yarn prices and which ultimately affecting the downstream sectors, including whole garment sector.

The cotton is playing a vital role for the performance of textile industry in Tamil Nadu and fortune of the textile industry is directly linked with the cotton prices. Tamil Nadu textile mills consume more than 100 lakh bales of cotton per annum which is about 43% of total consumption of textile mills from all over India.

The added feature is that the 65% of the fabric production for exports and 85% of knitwear production of our Country is taking place from Tamil Nadu. The textile industry's contribution to Tamil Nadu economy is significant which provides employment to more than 35 lakh people, in various sectors, mostly women from rural background. About 20% of the total exports from Tamil Nadu is contributed by textile industry.

After the announcement of DGFT on 17th August 2010, the cotton variety – Shankar-6, predominantly used for manufacturing of knitwear garments, quoted at Rs.30,800/- per Candy (one candy = 355.54 Kgs.) on 16th August 2010, is being quoted at Rs.37,700/- per candy on 1.10.2010.

Our apprehension is that these price rise will trigger the Garment units and other stakeholders of garment industry to take a decision for closure as the survival has become a big question mark these units and at this juncture, we do not find any other solution, other than the closure of the units. The concern is that more than 5 lakh people, mainly women workers from rural background employed with these units will render jobless and their life is put at stake.

The knitwear units are greatly affected despite, the sops provided by the Central Government to sustain in the domestic as well as in the international market. Due to increase in cotton prices, the 40s Chy (Combed Hosiery Yarn), which was quoted at Rs.139/- per Kg. on 1st August 2009 is now quoted at Rs.204/- per Kg., an increase of 47% and we expect an another hike in the price of yarn within a shorter period.

We have taken export orders for another four to five months and in the current situation, we are not in a position to deliver the order and therefore there is a threat of cancellation of such export orders and spoil the reputation of us in the international market.

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