New Delhi: A sudden surge in Indian raw cotton demand in China, the strongest competitor in global textile market, has sent alarm bells ringing in the domestic textile sector.
The export of raw cotton has registered an increase of 19% from onwards. As many as 4,28,076 bales (170 kgs constitutes one bale) were exported as against 35,9435 bales in 2008, as per the textile commissioner office data. Of this, 70% exports were made to China.
Accusing the international traders of hoarding, the industry circles said Indian cotton is 5% cheaper as against the cotton prices prevailing in the international market. Export orders for Indian stuff are being committed at 71.5 cent per pound as compared with 75.10 cent per pound in the international market.
The global cotton production is expected to be reduced by 5% and stay at 222 lakh tonne, says an International Cotton Advisory Committee report. Cotton production is expected to come down 16% in China.
“As many as 1,30,000 to 1,35,000 bales arrive every day. Traders are picking up the short supplied cottons and piling up stock for future trading. International cotton prices are ruling firm and the Cotlook A Index had also reached a level of 75 US Cents a pound, which has also influenced the domestic cotton prices. With cotton demand reviving globally, domestic mills are also seeing a surge in demand,” Confederation of Indian Textile Industry (CITI) secretary general DK Nair said.
Besides, with burgeoning cotton demand, exporters have become active. Owing to this and lesser production, domestic cotton prices are rising. The trend is expected to continue in near future. Shankar 6 already stands at Rs 27,000 a candy, as against its MSP of Rs 23,500. So far, approximately 62 lakh bales have arrived in Indian markets.
Meanwhile, registration of cotton export contracts with the textile commissioner has crossed 40 lakh-bales mark. India’s competitors such as Bangladesh, China, Pakistan and Thailand account for about 90% of total exports.
“Unless cotton exports are calibrated on the requirement of domestic industry basis, we will be exporting textile jobs in the form of raw cotton - that, too, to our strongest competitors in global textile markets,” CITI said.
The current lint prices are higher by 3% to 15% in J-34, H-4, Shankar-6, Bunny Brahma and DCH-32 varieties as compared with the prices during the corresponding period last year. A delegation of textile industry has met textile secretary Rita Menon demandin suspension of exports till March.
“The advantages of processing cotton within India at various stages of textile value chain to increase industrial production and generate employment are obvious. Restricting large exports is the only way of ensuring that cotton remains available domestically,” Nair said.
In its meeting held on November 13, the Cotton Advisory Board has revised its cotton production estimates at 295 lakh bales as against the earlier 305 lakh bales during the cotton season 2009-10. The industry, however, estimates the cotton production at 280 lakh bales owing to floods in Maharashtra, Andhra Pradesh and Karnataka.
After production contraction of around 2.2 % for FY 2008-09 over 2007-08 and subsequent de-growth for April, May and June, the cotton textile industry is picking up with production growth of 3.6 and 5.6% for July and August, respectively, for 2009 over same period of 2008. The ratio of cotton-to-manmade fibers and filament yarns used by the textile sector is 62:38, unique position in world textiles. Cotton dominates both the high-end clothing & textile and low-end products. Of over one lakh crore rupees additional investments in textile and clothing industry in last couple of years, cotton segment accounted for around 80%. Thus, the Indian cotton textile sector has achieved huge capacity expansion in recent years. Over 2 million spindles have been added during the last couple of years
Source : FinancialExpress