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Global textile bodies exhort India to lift cotton export restrictions
Nov '10
Trade unions and associations from the textile sector of 10 developing nations located in the Western Hemisphere have jointly written a letter asking their governments to take the necessary measures to stop the prohibitions imposed on cotton trade by the Indian Government. These trade unions stand for over 2.5 million textile as well as garment workers.

These trade unions have joined the league of the trade associations from four other nations and regions that had appealed to their respective governments to take similar measures towards the end of October. Together the groups stand for about four million textile as well as garment workers, who had generated $110 billion in textile and garment exports in 2008.

According to the letter, the cotton prices have increased by several folds, from 62 cents per pound to $1.40 per pound, since April 2010 when India had imposed the restrictions on cotton trade. The prohibitions imposed by India defy Articles III, VIII and XI of the General Agreement on Tariffs and Trade and because of this the mills in India are getting a subsidy of 16 cents per pound.

The discrepancy that has emerged in the global cotton trade has enabled India to seize larger market shares in textiles as well as garments, particularly when the global cotton supply has declined. As per the analysis of India's cotton production as well as consumption statistics, India has held back 1.5-3.5 million cotton bales from its export market so that it can promote its local industry.

This has caused the shortage of raw materials, particularly cotton and has also severely affected the textile and garment manufacturers of the countries in Western Hemisphere against the state-owned textile units of China which have the benefit of government funding. Chinese textile units are purchasing the cotton which is available in the market at exorbitant prices so that they can also acquire larger shares in the global market.

The imposition of restrictions by India on cotton trade has manipulated the prices of cotton, which has benefited its domestic textile sector but has also led to sharp increase in the cost of the textile and garment units of these nations from Western Hemisphere.

Fibre2fashion News Desk-India

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