Interviews
Availability of cotton and cotton yarn
22 Nov '10
5 min read
We have some surplus cotton at present and efforts should be to increase our production capacity for yarn and fabrics to consume our entire cotton and thereby further expand the raw material base for home textiles and garments. It is pertinent to note that the 5.5 million bales of cotton that we would be exporting this year can be converted to 750-800 million kg of yarn, which will be higher than the entire cotton yarn being exported from the country at present.
The following factors need to be taken into account while deciding the policy for export of cotton yarn:
• There are no duty refunds on cotton yarn exports by way of either DEPB or Draw Back.
• Cotton yarn production data taken into account by CYAB does not include blended yarn production, whereas all blended yarn with cotton as the dominant fibre is classified as cotton yarn in exports. Therefore a quantity of around 60 million kg needs to be added to the exportable surplus assessed by CYAB.
• A large number of spinning mills have export obligations for cotton yarn, arising from cotton imports against advance licences and from machinery imports under EPCG Scheme. EOUs and units in SEZs are also obligated to export cotton yarn produced by them. These export obligations will have to be waived, if there is any restriction on their exports.
Confederation of Indian Textile Industry (CITI) would therefore request that
1) Cotton exports during the year may be restricted to the quantity of 5.5 million bales already announced by government;
2) If any quantities out of the 5.5 million bales for which export contracts have been registered remain unshipped within the stipulated last date of 15th December 2010, these may not be allowed for shipment or fresh registration at least for the next two months by which time cotton arrivals in the market would pick up;
3) Any further registration of cotton export contracts may be allowed only against Letters of Credit; and
4) No controls may be introduced on exports or prices of cotton yarn, in the long term interest of the entire textile value chain.
Though prices of all textile products have been increasing in both the domestic and global markets, there is normally a time lag between the price increases in raw materials and in finished goods. CITI would request Commerce Ministry to provide sufficient export incentives to the value added segments until the overseas markets are able to absorb the increase in their raw material cost in full. Consolidation of production facilities in these segments for bringing their efficiency levels at par with the global competitors also needs active support of the Government.
The following factors need to be taken into account while deciding the policy for export of cotton yarn:
• There are no duty refunds on cotton yarn exports by way of either DEPB or Draw Back.
• Cotton yarn production data taken into account by CYAB does not include blended yarn production, whereas all blended yarn with cotton as the dominant fibre is classified as cotton yarn in exports. Therefore a quantity of around 60 million kg needs to be added to the exportable surplus assessed by CYAB.
• A large number of spinning mills have export obligations for cotton yarn, arising from cotton imports against advance licences and from machinery imports under EPCG Scheme. EOUs and units in SEZs are also obligated to export cotton yarn produced by them. These export obligations will have to be waived, if there is any restriction on their exports.
Confederation of Indian Textile Industry (CITI) would therefore request that
1) Cotton exports during the year may be restricted to the quantity of 5.5 million bales already announced by government;
2) If any quantities out of the 5.5 million bales for which export contracts have been registered remain unshipped within the stipulated last date of 15th December 2010, these may not be allowed for shipment or fresh registration at least for the next two months by which time cotton arrivals in the market would pick up;
3) Any further registration of cotton export contracts may be allowed only against Letters of Credit; and
4) No controls may be introduced on exports or prices of cotton yarn, in the long term interest of the entire textile value chain.
Though prices of all textile products have been increasing in both the domestic and global markets, there is normally a time lag between the price increases in raw materials and in finished goods. CITI would request Commerce Ministry to provide sufficient export incentives to the value added segments until the overseas markets are able to absorb the increase in their raw material cost in full. Consolidation of production facilities in these segments for bringing their efficiency levels at par with the global competitors also needs active support of the Government.
Confederation of Indian Textile Industry
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