Govt may reopen export ceiling for cotton yarn

Had put a cap of 720 million kg this year.

Textile and commerce ministries are likely to reopen the ceiling on cotton yarn exports. According to sources in the ministries, the policy in this regard may be announced in a fortnight.

The secretaries of the two ministries met textile sector stakeholders on Friday in New Delhi. The Union government had put a ceiling of 720 million kg this year on export of cotton yarn. The export licences of manufacturers expired on January 15, by when 670 million kg had been shipped. The ceiling will be raised to allow exporters to meet their commitments, just as the government did in case of cotton.

According to S P Oswal, chairman of the Vardhman Group, spinning mills have a capacity to export close to 850 million kg yarn annually and such restrictions do not make economic sense. Such decisions, he said, undermine the credibility of Indian exporters in the international market.

Oswal said the country was at a disadvantage by exporting 900 million kg cotton and 720 million kg yarn this year. He said, “The value of yarn is double that of cotton. We lose substantial foreign exchange by exporting raw cotton. Indian spinning mills have been consistently expanding capacity (about three million spindles are added every year). This also creates employment opportunities. So, the export focus should be shifted from cotton to yarn and fabric.”

D K Nair, secretary-general of the Confederation of Indian Textile Industry, said no ceiling was necessary, as the country had sufficient capacity. He said the spinning industry had a cumulative annual output of 3,540 million kg and up to 900 million kg could be exported without restriction. Last year, total exports were about 600 million kg but the global demand increased at a higher pace this year than the domestic demand.

“About 750 million kg yarn could have been produced from the 55 million tonnes raw cotton exported this year. So, instead of curbing exports, the spinning industry should be encouraged to enhance capacity,” he added.

Ashish Bagrodia, president of the Northen India Textile Millers Association, said yarn prices had risen in line with raw cotton prices but Indian yarn was still the cheapest in the world. He said the spinning industry had enough cotton yarn for domestic consumption. The ministry would also review the industry’s plea to restore the Duty Entitlement Pass Book incentive on exports that was withdrawn some months ago.