Dilip Kumar Jha / Mumbai December 2, 2010, 0:53 IST
The Union textile ministry has put a 720-million-kg cap on cotton yarn exports for the current financial year. The move could help soften prices of yarn and cotton.
The ministry said the quota would not be extended under any circumstances. With this, the propensity for further exports to cash in on higher global prices came to an end. Industry sources said the textile ministry had already taken a decision in this regard, while the notification was expected on Thursday.
“The industry has already achieved the quota so far this year and hence there is no further room for exports,” said Sunil Khandelwal, chief financial officer of Alok Industries, a Mumbai-based garment exporter.
The move would also soften cotton and polyester yarn prices in the domestic market due to excess availability, which in turn would cool cotton prices, he added.
While cotton prices have been revised from Rs 2,700 to Rs 4,400 per maund this year (now Rs 4,200 per maund), polyester prices have been revised even sharply; from Rs 63 a kg in September to Rs 110 a kg in November.
Cotton yarn prices have touched an all-time high of over Rs 240 per kg (40s), an increase of over 80 per cent in the last one year.
As a result, fabric prices have also shot up by 38-90 per cent for various counts. Price of cotton has doubled from Rs 23,000 a candy to Rs 46,000 over the past one year despite higher production.
Cotton yarn exports surged 35 per cent in the first half of the current financial year and are expected to surpass 800 million kg this year as against 589 million kg last year.
“Our demand is that the government should keep cotton yarn export quota at 650 million kg like last year. The decision, although late, is a welcome move which will certainly benefit the textile industry,” said Premal Udani, chairman of Apparel Export Promotion Council (AEPC).
AEPC had earlier convened a one-day nation-wide strike to draw the Centre’s attention to the ever rising raw material prices.
While the cost of raw material has increased exorbitantly, final products prices have not surged proportionately. If the government allows exports of only final products, the realisation of such products increases, the benefit will be automatically passed on to downstream players including farmers.
D K Nair, secretary general of Confederation of Indian Textile Industry (CITI), however, said he would suggest the government to allow exports in the future for higher realisation for cotton yarn from the overseas markets.
Source: http://www.business-standard.
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