Scrapping of sops causes dip in cotton yarn exports: Texprocil

Despite being the largest exporter of cotton yarn, India's share has dipped to around 26 per cent in 2017 from 30 per cent in 2015 for various reasons, including withdrawal of incentives, chairman of Cotton Textiles Export Promotion Council (Texprocil) Ujwal Lahoti said today.

Exports have stagnated in the last two years, whereas Vietnam has become the second largest cotton yarn exporters in the world with a marketshare of 20 per cent in 2017, Lahoti told reporters here.

Attributing the dip to the absence of a level-playing field, high transaction cost and lower rate of export benefits, he said the fall in demand was mostly because of China.

China was shifting its yarn production to Vietnam, which has become a conversion centre for Chinese cotton, following rise in labour cost, he said.

India exported 603 million kgs of cotton yarn to China in 2013-14, which fell by half to 315 million kgs in 2017-18, while Vietnam's exports to China increased from 287 million kgs to 718 million kgs during the period, Lahoti said.

China is importing from India only to bridge the gap in demand from supplies from its domestic spinners and imports from Vietnam, he said.

However the drop in exports to China was to some extent compensated by the increase in exports to Bangladesh, Turkey, Portugal, Pakistan and Egypt, he said.

Stating that Indian cotton yarn attracted 3 per cent to five per cent import duty in China, supplies from Vietnam did not attract any such tariff, Lahoti urged the union commerce ministry to get zero duty benefits for Indian cotton yarn by initiating talks through fora such as APTA (Asia-Pacific Trade Agreement) and RCEP (Regional Comprehensive Economic Partnership).

"If the tariff is corrected, our exports will get a boost," Lahoti added.