Exports to China, the main buyer of Indian cotton yarn, have declined, industry sources said.
China imported 149.66 million kg of cotton yarn during the first three months of last financial year (2015-2016) and it dropped to 99.09 million kg during the same period this year. The decline in exports started in April 2014.
Total cotton yarn exports from India used to be 140 million kg a month and it has dropped to about 100 million kg now, says M. Senthil Kumar, chairman of Southern India Mills’ Association.
With a drop in demand in the domestic and export markets, capacity utilisation in textile mills has also come down. With the existing capacity, India can produce up to 500 million kg of yarn a month. However, it is only about 470 million kg now.
Bangladesh is the second largest buyer of cotton yarn from India and exports to Dhaka went up by 38.87 per cent in value between April and June this year and 52.1 per cent in terms of volume during the same period. This year, India’s exports to Pakistan have also improved in terms of value and volume.
Competitiveness of Indian cotton yarn in the international market should improve. Further, fluctuations in cotton price have hit the textile mills, Mr. Kumar said.
The government should give two per cent under the Merchandise Export Incentivisation Scheme and three per cent under the interest equalisation scheme for one year.
This will help India increase export to other countries too.
Cotton Corporation of India should buy 70 lakh to 80 lakh bales of cotton in the peak arrival period and supply it to the mills later to stabilise the prices, he said.