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Tuesday, Aug 06, 2002

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Buoyancy in textile exports may spur cotton imports

G. Gurumurthy


EVEN as the cotton textile industry is basking in the export buoyancy seen for yarn and fabrics, domestic textile manufacturers are worried over the anticipated decline in cotton output this year due to the poor monsoon.

With the south-west monsoon almost entering its withdrawal phase and the deficient rainfall already impairing the cotton prospects in Punjab-Haryana-Rajasthan, the textile industry and cotton trade feel the shortage of cotton in the coming season (September-October) may go beyond the earlier projected 10 per cent level, sources in the industry say.

``Depending on the rainfall pattern over the next ten days, we anticipate the cotton crop reduction to be anywhere between 15 and 30 per cent, and the lack of rains, besides impacting the size of the crop, may tell on the yield as well,'' say the key members of local cotton trade here.

The sources say that a downward revision from the cotton trade/ cotton advisory board of the estimated cotton output level of 158 lakh bales is likely by the end of this month.

This is expected to trigger greater raw cotton imports in the coming months and some import indenting agents expect that after a lull of about one year, cotton import scene will look up this year with estimated imports of around 2.5 lakh bales. This is more than the 2.2 lakh bales imported in 2000.

In such a scenario, the prevailing 10 per cent import duty on raw cotton would act as a stumbling block for the mills seeking to import cotton and the Government may come under pressure to bring down the customs duty.

In the meantime, mills have increased yarn rates, both for export and domestic markets, due to the favourable climate prevailing.

Most of the mills are reported to have announced hikes ranging from Rs 5 to Rs 8 per kg in yarn prices this month, and similarly, there has been a hike of about 5 cents in export prices (for September delivery).

Going by the trend, it seems that the mills may follow it up with some more hikes next month. Indian yarn shippers are encouraged to go for price hike as their Pakistani counterparts too are jacking up rates ranging from 6 to 8 cents, market sources say.

While coarser yarn of 20s/30s/40s counts faired better in exports, grey fabric exports have also improved in the last two months, raising the confidence of the textile sector. The improved working condition is anticipated to cause pressure on the raw material front (availability of cotton) in the coming months as many are not left with little stock.

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