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AEPC seeks Centre's intervention over rising yarn prices

03
Sep '12
Dr. A Sakthivel, Chairman Apparel Export Promotion Council (AEPC) while expressing its concern over the volatility in the price of yarn has written to Shri Anand Sharma, the Union Minister for Commerce, Industry & Textiles. In his letter Dr. Sakthivel remarked that, “Unfortunately in the last few months, we have experienced volatility in the price of cotton yarns.

“While cotton has gone up by about 3% to 5% in the last 2 months, yarn prices have increased to 15%+ in the same period of time.  As a matter of fact, Indian cotton yarn prices are higher than the price from other countries such as Pakistan, CIS countries, etc.” 

Dr. Sakthivel in his letter shared the facts which depicted the clear picture. He stated that, at the recently concluded Cotton Yarn Advisory Board meet on 23rd August, 2012 a rather grim scenario has emerged as under:

  • A total production estimate of cotton yarn is 3.5 billion kgs.
  • Exports of cotton yarn are projected at 920 million kgs, but based on current estimates may exceed one billion kgs.
  • Domestic supply last year for cotton yarns was 2.6 billion kgs.  We expect the demand to increase to 3.2 billion kgs as under:

-     For the export target of 18 billion dollar fixed by the Ministry for apparel industry will require 400 additional million kgs of cotton yarn.  The domestic industry is also growing very well and their additional requirement of cotton yarn is estimated at roughly 500 million kgs. Therefore, the total additional requirement would be 900 billion kgs.

-     Assuming even a 60% up take of the total requirement, we would still require additional 550 / 600 million kgs of yarn.

-     Under the current circumstances, this quantity may not be available from the domestic sources.

Suggesting solutions in his letter Chairman AEPC further stated that, “There are only 2 ways to ensure that the value add segment is not starved of raw material at reasonable price; cap on exports of cotton yarn or free imports of cotton yarn.

“At this stage we are not advocating any cap on exports, but at the same time, we request that the custom duty of 10% on cotton yarn be completely removed and yarn imports are made duty free and drawback may be allowed on export of garments manufactured from such imported cotton yarn.”

The above suggestion is based on similar dispensation for import of raw cotton by the spinners.  We are more than prepared to pay the CVD, so that there is no loss of revenue to the Government, he added.

Dr. Sakthivel requested the Textiles Minister for an early action because garment industry is fast approaching peak season. Chairman AEPC also request that the cotton yarn price be carefully monitored as small manufactures and handloom weavers are considerably impacted with the steep price increases.

Chairman AEPC thanked Textiles Minister for the continued support to the garment industry and assured to meet the target of 18 bn US $ set by the Ministry.

Apparel Export Promotion Council (AEPC)


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