Indian minister remains non-committal on cotton, yarn export ban

The minister assured industry stakeholders that the government will actively consider the demand of the spinning sector for exemption from import duty on those import contracts in which bills of lading is issued up to September 30, 2022, to overcome current cotton shortage and logistic issues.

The industry has been demanding for a short-term ban on export of cotton and cotton yarn to help cool prices, so that the sector can retain its global competitiveness. The major suggestions given to the minister included removal of cotton from commodities traded at Commodity Exchanges, and declaration of cotton as an essential commodity. Industry representatives also demanded removal of import duty of 10 per cent on cotton yarn, and to allow duty free cotton import till December 2022. But the minister gave no assurance on any of these demands, according to people who were present at the meeting.

Raja M Shanmugham, president of Tiruppur Exporters Association (TEA) told Fibre2Fashion that industry representatives suggested for duty free cotton yarn import but there was no conclusion in the meeting. TEA representatives said in the meeting that knitwear exporting small- and medium-sized units are facing financial stress on the operational front. The major concern is that liquidity has been drained off from its sanctioned limits. We called for a specified scheme for micro, small and medium enterprises (MSMEs) under the Emergency Credit Line Guarantee Scheme (ECLGS). Shanmugham said that they had also asked for additional loan limit to be increased from 30 per cent to 50 per cent of the existing limit.

Businessmen in the textile industry said they are disappointed by the outcome of the meeting as they were hoping for some immediate relief. The meeting focused more on long term solutions to increase cotton supply with optimum balance between the interests of farmers and the industry.

Meanwhile, Jagdish Soni, a cotton trader from Ahmedabad, has sent a letter to Prime Minister Narendra Modi with few suggestions. He said that a specialists committee should study the success story of Australia for very high yield of cotton. He also suggested that it should be ensured that only high-quality seeds are given to growers. He said that China’s cotton policy should also be studied.

In the absence of immediate steps to cool down the prices, the market is likely to see more highs. Chetan Bhojani, a broker from Ahmedabad, said that cotton prices have already touched a level of ₹110,000 per candy of 356 kg. If the supply remains tight, the prices may touch ₹125,000 per candy. Some sources said that cotton yarn prices are also likely to see new highs.

ALCHEMPro News Desk (KUL)