India’s overall cotton yarn exports remained under pressure during the current financial year due to sluggish demand from China, despite a robust demand from Bangladesh. But with Chinese cotton auction which started at a 25 per cent premium over the prevailing fibre rate in India, Indian exporters are hoping to see a revival in cotton yarn exports.
The first day of Chinese auction quoted cotton prices between Rs 51,000 and Rs 56,000 a candy (356 kgs) as against Rs 42,000 a candy currently prevailing in most local markets here. This means Chinese cotton is costlier by a wide margin.
Still Chinese spinning mills buying cotton perhaps for blending with fresh cotton. But, because of high prices, India tends to gain despite 3.5 per cent levy of duty by China on import from India.
India faces direct competition from Vietnam as China allows zero duty import from there. So, instead of cotton, Chinese textiles mills would move to purchase cotton yarn from India.
Siddhartha Rajagopal, executive director, The Cotton Textiles Export Promotion Council (Texprocil) said that they are expecting, therefore, cotton yarn exports to turn positive this year after a steep decline last year.
Yarn demand from overseas buyers remained sluggish since October price hike in cotton as importers held their orders in anticipation of price fall. But, now they believe that cotton prices are not going to come down. So, they are booking cotton and cotton yarn. So, the overall demand has revived in the last few weeks, a Chennai–based textiles manufacturer said.
Spinning mills, however, have urged the government to extend two per cent tax benefit to yarn sector under Merchandise Exports from India Scheme (MEIS).
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