Cotton yarn exports up 15% in FY12 on high demand abroad

Cotton yarn exports jumped 15 per cent during the last financial year due to rising demand from foreign markets.

Data compiled by the Directorate General of Foreign Trade (DGFT) under the Union ministry of commerce, showed registrations for export of 827.68 million kg of cotton yarn were made during the 2011-12 financial year, compared to 720 million kg in 2010-11.

The staggering growth in registration indicates the global textile industry is reviving, despite the ongoing uncertainty in economies. This is in sharp contrast to conventional wisdom that the demand of apparel declines in case of an uncertain global economic scenario.

“China is the largest producer of cotton yarn in the world. But the country is gradually vacating the space as they are concentrating on production of finished products, especially high value items. Thus, Chinese importers have increased their dependence on India’s cotton yarn, thereby, boosting shipment of the textile raw material from India,” said D K Nair, secretary general of the Confederation of Indian Textile Industry.

Export is set to grow this year as well, as orders continue to pour in. In this financial year (2012-13), cotton yarn registrations are expected to go above 70 million kg a month.

During FY11, the government had capped exports at 720 million kg in order to meet the domestic demand, which the local textile mills were struggling with. Although these targets were achieved nearly three months before, yet the government would not allow exports. There was no cap imposed on yarn export for FY12.

According to Nair, the restriction in export resulted in a net loss of Rs 11,000 crore which the sector otherwise could have gained through exports and an anticipated rise in prices for domestic users. Consequently, many yarn producers were forced to cut production.

There are no new markets that can be targeted, as yarn is mostly imported by countries into producing finished goods. Currently, major export destinations for cotton yarn are Bangladesh, China, Hong Kong, Korea, Turkey, Peru and Europe.

“In the last five years, cotton yarn exports have been on a rise and will continue to do so even in the future,” said a city-based analyst.

The government is expected to come out with a new policy for cotton and cotton yarn before the start of the new cotton year (starts in October and ends in September), according to sources close to the matter.