Cotton yarn export ceiling to hit textile sector

Short supply

Mills will be forced to divert supplies from domestic market to export markets during this period, reducing availability for domestic consumers of yarn.

Our Bureau

New Delhi, Dec. 2

The quantitative ceiling of 720 million kg that the Ministry of Textiles has imposed on December 1, 2010 on export of cotton yarn during 2010-11 will have adverse consequences for the textile industry, according to Confederation of Indian Textile Industry (CITI).

Export Authorisation Registration Certificates have already been issued for the entire quantity with a maximum period of 45 days for shipment.

In a statement issued here, Mr Shishir Jaipuria, Chairman, CITI, said that this decision would push up yarn exports over the next 45 days, since exports that would have normally taken place during four months up to end March 2011 will now have to be made during the next 45 days.

Mills will be forced to divert supplies from domestic market to export markets during this period, reducing availability for domestic consumers of yarn, CITI said in a statement.

“There was no shortage of cotton yarn in the domestic market so far, though there were complaints of inadequate availability from certain sections of the industry. But now there may be actual shortage for domestic consumers, though for a limited period,” Mr Jaipuria said.

Following the restriction on cotton yarn exports from India, international prices for cotton yarn are slated to shoot up, since India is currently the largest supplier of cotton yarn in the global markets.

The other major cotton yarn exporting countries such as Pakistan, Turkey and Indonesia will be the major beneficiaries of this price increase, the statement said.

The CITI Chairman asked the Government to reconsider the decision to cap cotton yarn exports, in view of the problems that the decision would create.

Source: http://www.thehindubusinessline.com/2010/12/03/stories/2010120353150700.htm