'Cotton Yarn Exports Should Be Encouraged'
Business Standard: What steps would you suggest to overcome cotton contamination problem?
B K Patodia: It is true that cotton contamination is a very serious problem, hitting particularly mill exporting value-added products like yarns, fabrics and other downstream products. This is also one of the reasons why farmers realise relatively lower prices. Due to lack of awareness and carelessness, contamination like polypropylene strings, jute twine, hessian pieces, coloured cotton cloth, human hair, leather and paper pieces, oily cotton, excessive cotton seeds etc. are found in cotton, which are very difficult to get rid of during the spinning process.
It is essential that a more rigorous human supervision is ensured right from the farm to the factory level to avoid such contamination.
Accordingly, farmers should be encouraged to pack cotton in cloth bales rather than hessian or polypropylene cloth. There should be training and awareness programme for the farmers and workers in the ginning and pressing factories to handle raw cotton very carefully and ensure cleanliness all-around. Trained workers should be deployed to remove contamination before ginning and pressing. The Cotton Control Order issued by the ministry of textiles under the Essential Commodities Act lays down certain standards with regard to trash comment, moisture content etc. These parameters have been prescribed by the Bureau of Indian Standards. However, the enforcement of the Order had not been vigorous. In my opinion, the standards for cotton contamination could also be laid down by the Bureau of Indian Standards and strictly enforced under the Cotton Control Order.
BS: What is your opinion on open-end machine yarn export? Patodia: The Indian Cotton Mills' Federation (ICMF) and the Southern India Mills' Association (SIMA) have recommended to the ministry of textiles that exports of open-end yarn of counts up to 10s should be excluded from internal ceiling fixed for export of cotton yarn. This is because such yarns are largely manufactured from cotton waste and there is a 100 per cent value addition while exporting open-end yarn as compared with exports of cotton waste.
BS: Will the government's cotton export policy hamper yarn exports?
Patodia: The present policy of the government with regard to export of raw cotton is certainly not in the country's interest. In the first place, export releases are made by the Union government on ad hoc basis, without assessing the cotton crop and determining the demand-supply position. When exports of cotton are allowed, the cream of the crop is exported and the domestic industry is denied the benefit of quality cottons required for the manufacture of value-added textile products like yarns, fabrics etc. After providing for the requirement of the industry and sufficient carry-over, surplus cotton can be allowed for export in only those varieties where supply is in excess of domestic requirements. Further, exports should not be bunched at a time, but should be staggered over a longer period. Exports of cotton yarn have displayed a buoyancy during the last three years or so. And there is still great potential for exporting larger quantities of cotton yarn and India can become the largest exporting country.
After comparing the export prices of raw cotton and cotton yarn, it is revealed that there is over 100 per cent value addition in respect of cotton yarn as compared with raw cotton. It is, therefore, in the country's interest to encourage higher exports of cotton yarn rather than allow export of raw cotton.
BS: How is the growth of exports of yarns of both lower and higher counts ?
Patodia: It may be stated that as against actual exports of Rs 4,770 crore in 1996, the Yarn Committee of Texprocil has fixed a target of Rs 6,000 crore for the year 1997. I am optimistic that the industry will surpass the target. The analysis of counts, group-wise exports of cotton yarns during the last three years reveal that exports of cotton yarn of counts up to 40s have increased from 190 million kgs in 1994 to 355 million kgs in 1996, registering a growth of 87 per cent.
Similarly, exports of cotton yarn of counts above 40s have also impressively gone up from 27 million kgs in 1994 to 49 million kgs in 1996, showing a growth of 81 per cent. It needs to be appreciated that there is limited demand in the international market for cotton yarn of finer counts.
All the same, India has been able to garner a larger share of such yarns in the international market. To accelerate the pace of shipment of cotton yarn, it is necessary to remove the internal ceiling of exports of cotton yarn, particularly when such large quantities of cotton are allowed for exports.
Another area which needs to be tackled is the modification of the EPCG scheme. Currently, EPCG licences are granted to spinning units only against exports of cotton yarn of counts 41s and above.
Such a stipulation was imposed when there was cotton shortage in the country. However, the cotton scenario has radically changed. . Besides, the minimum annualised obligation limit under the EPCG scheme should be done away with.