Industry bodies seek easing of cotton yarn prices

With spiralling cotton prices affecting the whole value chain

of apparels and textiles industry, India’s export promotion councils and export bodies are seeking the help of the ministry of textiles to curb prices. After A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC) raised the issue of high cotton yarn prices prevailing in domestic market for export manufacturing, the council asked industry associations to also write to the textile ministry regarding the problem. In his presentation to the Textile Secretary, he said, “In the current year (2012 - 2013), the cotton yarn prices have already crossed 900 million kilos, which is a record export of such demand in our competing countries; mainly China.” He pointed out that garment exporters in India are taking up export orders before four to six months after quoting the prices based on the prevailing cotton yarn prices. Hence the sudden hike in yarn prices is affecting price calculations and margin could not be added, as the orders have been taken in tight competition.

Similarly, Rakesh Vaid, President of the Garment Exporters Association (GEA) has also requested the textile ministry to resolve the pressing problem being faced by garment exporters. He says because of persistent and significant hike in the price of cotton yarn it has adversely affected the competitive strength and performance of Indian apparel industry particularly shrinking of overseas export orders in this highly tough and competitive international market. Vaid has suggested a few recommendations “First, cotton yarn exports, except 60s count and above, may not be permitted for exports; second, the facility of duty drawback on the exports of cotton yarn should be withdrawn immediately; third duty free import of cotton yarn should be permitted to stabilize the prices of basic raw material in domestic market.”

Every exporter and exporting country has been struggling to get a reasonable slice of export trade. The government on its part, due to its own financial constraints, has not so far extended adequate fiscal support which is necessary for garment exports to sustain themselves. All this underscores the need for additional government support, which is more likely now than ever before, as the government has realized that the declining exports are a cause of very serious concern, particularly when our foreign exchange reserves are failing to keep pace with our growing imports.