Cotton imports estimated at 2 mn bales

Cotton imports are picking up in India, otherwise a net exporter. This is due to high local prices and transport costs, specially for southern states that bring cotton from western India. This cotton season (October 2013 to September 2014), imports are estimated at two million bales (170 kg each) against the target of 1.2 million set by the Cotton Advisory Board in October.

 

Mills in southern India find it easier to import cotton rather than buy it from the domestic market. Also they have the advantage of the 90-180 days credit facility which puts them in a better spot when it comes to payments. 

 

Bhadresh Mehta, a Mumbai-based exporter, said, “This cotton year, exports are estimated at two million bales as many southern mills are looking to importing. They find this cheaper (by Rs 2,000 to Rs 4,000 a candy) and enjoy the option of buying on 90-180-day credit facility.” The Africa imports may not be as good as Shankar-6. However, the mills find contamination manageable.

 

The price difference is also around Rs 2,000 to Rs 4,000 per candy which makes importing cotton although the more a better option compared to sourcing it from the domestic market.

 

Mostly cotton imports are happening from some of the African nations as transportation is viable if imported material lands in southern posts.

 

K Selvaraju, secretary-general, South India Textile Mills Association, said, “Tamil Nadu accounts for 50 per cent of the yarn production in India. It produces five-600,000 bales (a bale is 170 kg) and consumes 12 million annually. Most cotton is brought from Gujarat and Maharashtra.”

“The cost of transporting 100 bales from Gujarat is Rs 10 lakh, unviable. Almost 50 per cent of the cotton consumed in Tamil Nadu is from there. The government should implement the Cabotage Rule (under the Shipping Act).”

 

Some mills have resorted to import of cotton from West Africa that has a cost advantage over 5% over the cotton brought from Gujarat. 

 

Cotton was removed from Essential Commodities Act in year 2008, this should be restored, he said.

 

“The mills get credit from banks for three months. It should be extended to nine. The margin money requirement should be reduced to 10 per cent from 25 per cent.”

 

The power situation in Tamil Nadu has improved over the last few years due to wind energy, but evacuation remains a hurdle. Grid connectivity has to be substantially improved to reap the benefits of additional power generation.