Cotton import in India is likely to double this year, due to the higher prices in the domestic market than abroad.
The Confederation of Indian Textile Industry (CITI) estimates the cotton import at 1.5 million bales (a bale is 170 kg) in the current cotton year (October 2013-September 2014), as compared to 0.7 million bales the previous year.
"Cotton is selling in India at four-five per cent premiums, said D K Nair, secretary-general of CITI. "The sea transport cost from Africa to southern ports is drastically lower than surface transport cost from the central and western Indian states." Indian mills have signed contracts with African suppliers for all types of cotton imports.
The benchmark Shankar-6 variety is trading at Rs 11,642 a quintal, in comparison with the landed cost in southern ports at Rs 11,000 a quintal.
Prices in both domestic and international markets declined two to three per cent in the past week. The trend is likely to continue, due to lower demand from China. That country is a perennial importer from India but it is not buying the quantity of both cotton and yarn as in earlier years. Cotton demand from the domestic market has also fallen in recent months, due to a slump in consumption from yarn producers.
Prices are likely to remain subdued. Reflecting the trend, cotton on the InterContinental Exchange is quoted lower for delivery in November and December, compared to near-month contracts.
Despite the slowing in exports in recent weeks, Texprocil, the apex export promotion body, reported yarn exports at 293.6 million kg in the first quarter of the current financial year (2014-15), compared to 279.3 million kg in the same period last year.
Texprocil has urged Cotton Corporation of India to buy from the market when prices here are cheaper than abroad and offload when these breach international prices. It would, they say, benefit farmers and mills.