Cotton yarn exporters stripped off benifits.

COIMBATORE: Concerned over the exclusion of cotton and cotton yarn exports from an incentive scheme, the Southern India Mills' Association (SIMA) has said that the sudden withdrawal of benefits would result in huge losses to the textile mills. Directorate General of Foreign Trade (DGFT) on Wednesday notified the exclusion of cotton and cotton yarn exports from the Focus Market Scheme (FMS) that provided 3-4% export incentives to exporters. "Such inconsistent and short sighted policies would make Indian exporters lose their competitive edge and credibility in the international market," said T Rajkumar, chairman of the association.

Exporters are already under pressure owing to volatility in the exchange rates, he said, making the government move a detriment to Indian yarn exporters. Rajkumar appealed to the Centre for immediate restoration of benefits to achieve the vision of increasing textiles and clothing exports from 32.5 billion US dollars to 42.5 billion US dollars within a year. "Moreover, cotton yarn exporters have export commitments for 2-3 months with countries like Colombia, Peru, Venezuela, Chile, Argentina, Morocco and Tunisia", he said in a statement.

China and Bangladesh are the major export markets and 65% of the yarn exported from India is to these countries. However, textile mills are apprehensive about losing valuable overseas customers owing to high freight costs. Moreover, there is huge volume of surplus cotton and surplus spinning capacity in India. According to them, textile mills were able to capture markets in these countries only because of the FMS benefits offered by the government. "It seems the government has removed certain products from FMS that have export restrictions but it should be noted that cotton and cotton yarn exports do not have any restriction," Rajkumar said.

Apart from meeting the growing demands of the domestic sector, textile industry in India has over 30% excess spinning capacity that is used for exports. Cotton based spinning sector in the country has invested more than Rs.1 lakh crores in upgrading the technology and adding more than 20 million spindles over the last decade.

Source : timesofindia.indiatimes.com