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Web Exclusive | September 2017

India’s cotton yarn exports fall

According to data compiled by the Cotton Textiles Export Promotion Council (TEXPROCIL), Indian cotton yarn exports witnessed a fall of 9.79 per cent in the first four months of fiscal 2017-18. Exporters cite slow pick up by China and Bangladesh, the two big target markets comprising around half of the cotton yarn shipments from India, for the decline.

The country’s cotton yarn exports was worth $916 million between April and July. Exports to China, which accounts for 31 per cent of the overall export figure, have declined by 48.58 per cent during the period. The export decline has put at risk substantial investments in this sector due to a 60-65 per cent fall in capacity utilisation because of weak demand from domestic and global markets, a leading Indian business daily reported recently.

The report attributes demonetisation and the imposition of 5 per cent goods and services tax (GST) for the tremendous pressure that domestic cotton yarn manufacturers have been reeling under. This is because the majority of the industry falls under the unorganised sector dealing in cash. As cotton yarn manufacturers never paid any taxes in the past, GST compliance brought the entire business to a standstill.

According to TEXPROCIL Executive Director, Siddhartha Rajagopal, Vietnam is gaining market share in China at the cost of India primarily due to zero tariff on imports to China and investment by Chinese textiles mills in Vietnam. Vietnam, with no cotton base, is now the largest supplier of cotton yarn to China, accounting for around 32 per cent of imports into China.

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