MUMBAI: India’s cotton exports are likely to end up much below the estimated projections due to sluggish demand across global markets and a
higher minimum support price (MSP) for the crop.
Exports have been affected as major importers like China, Turkey, Peru and Egypt decided to slash their imports. And the effects are quite apparent. Contracts have been booked for only 9.5 lakh bales of cotton and just 5.3 lakh bales have been shipped offshore till January 31, 2009, according to trade circles. For the 2008-09 cotton year (October-September), the government’s export projection is estimated at 75 lakh bales.
With deepening economic recession, many countries, which accounted for a major share of India’s cotton and cotton yarn exports, have started downsizing contracts or introducing safeguard measures to protect their domestic producers, according to Siddhartha Rajagopal, executive director, Cotton Textiles Export Promotion Council (Texprocil).
In 2008, China bought about 60% of the total Indian cotton exports, but this year it has marginalised its contracts and is buying from internal traders due to higher prices in India, said a senior official of Cotton Association of India. Low quality and the higher MSP are affecting competitive sentiments in the international market, he said.
This view is echoed by Dhiren N Sheth, president of the Cotton Association of India, who said that the country may export a maximum of 50 to 55 lakh bales as against the earlier estimates of 75 lakh bales for the current cotton year. “Indian prices of cotton are high as compared to the international prices and it will be difficult to export more than 50 to 55 lakh bales this cotton year,” he said.
Recently, Turkey, Egypt and Peru have implemented preventive measures to reduce their imports. In addition, Egypt has also imposed measures on imports of cotton yarn, mixed yarns, cotton woven fabrics and mixed fabrics into Egypt. These are in the form of increased import fees amounting to 25% of the CIF value, subject to that the fees not being less than half a dollar (0.5 cents) per kg, said Mr Rajagopal. Peru accounts for 5% of total Indian cotton export, while in Turkey, India has the largest market share of about 50%. Trade with Pakistan is also in bad shape.
However, Bangladesh is the sole country to which exports are growing. India’s cotton export to it is expected to double to 3 lakh bales this year as against 1.45 lakh bales last year. Most of the export contracts registered with the Textile Commissioner are said to be for Bangladesh.
According to the Cotton Advisory Board (CAB), last year the total supply was about 315 lakh bales, of which 88 lakh bales were exported. For current year, total supply of cotton is projected at 370 lakh bales and exports at 75 lakh bales, the board said.
Source : The Economic Times