Duty waiver will ensure cotton availability for Indian industry

ICE cotton futures traded limit-up on Wednesday, as India’s decision to allow duty-free imports strengthened the natural fibre’s bullish outlook. Cotton contract for May 2022 closed at 142.77 cents, up 426 points; July 2022 closed at 141.51 cents, up 406 points; December 2022 closed at 122.18 cents, up 215 points. An analyst said that the drought situation in the southern parts of the US, smaller Indian crop, and on-call sales are some supporting factors for ICE cotton.

Chetan Bhojani, an importer from Gujarat, told Fibre2Fashion that Indian cotton is cheaper by at least ₹2,000-3,000 per candy of 356 kg. “Shankar-6 cotton of 28.5 mm is ruling at around ₹91,000-92,000 per candy in Gujarat. Prices of 29 mm cotton are ₹94,000-95,000 per candy. In comparison, ICE cotton of 27.5 mm will cost at around ₹87,000-87,500 per candy (plus CIF). Short staple but less contaminated ICE cotton can be used only for 20-30 count yarn. Spinning mills would need medium staple cotton for yarn of higher counts which will cost more.”

Sanjay K Jain, managing director of TT Industries Limited said that ICE has gone up by more than 5 per cent overnight after the decision of duty-free import in India. “The decision of duty-free cotton import is two months delayed, which has already done damage to value addition industry. The prices are unlikely to come down, but the decision will ensure availability of the natural fibre.”

A leading trader from Delhi said that the rise in ICE cotton made imports unviable but it will help mills to run from July to September 2022 during off-peak season of arrival.

According to market sources, India can get cotton from the US, Brazil, Australia and some African countries like Cameroon and Burkina Faso if the prices come down for import parity. Sources said that spinning mills in south Indian are more desperate to import cotton, which they can do through Tuticorin, Nava Sheva and Mudra ports. Australia and African countries will be feasible sources for import due to logistics costs. However, current higher prices in other countries do not favour imports. According to market estimate, cotton (29 mm) import from Burkina Faso will cost at Tuticorin at around ₹98,700 per candy (FOB). Plus, importer will have to bear extra logistics cost to bring the consignment to factory.

ALCHEMPro News Desk (KUL)