The Hindu Business Line : Cotton exports may top 47 lakh bales next season

China factor
One of the main reasons for China to turn to India is increasing freight rates.
Chinese units get the Shankar-6 variety at Rs 20,000 a candy from India.
The industry is unable to pinpoint how much China has gained or will gain from import of Indian cotton.

Chennai , Sept. 21

Cotton exports during the current season to September are estimated at a record 47 lakh bales (of 170 kg) and in the next season, beginning October, they are expected to be around the same level. But the other side of the export success is that at least 80 per cent of the shipments have headed to China this season.

"We are exporting to keep our competitors competitive," says Mr D.K. Nair, Secretary-General, Confederation of Indian Textile Industries.

China is among the main competitors of India in the global textiles market, particularly for yarn and garments.

One of the main reasons for China to turn to India for cotton is increasing freight rates.

The medium staple variety Shankar-6 is the variety preferred by the Chinese.

Tough competition

Spinning units in China have been able to get the Shankar-6 variety at an average Rs 20,000 a candy of 355.56 kg from India. But trade sources say Indian exporters in a bid to win contracts could have sold even lower.

"There is cut-throat competition to get export contracts," they said.

Domestic mills, however, would have got the same variety at prices lower by Rs 2,000 a candy.

Though the trade is hoping of a similar export prospects for the next season, so far about one lakh bales of cotton have been contracted for exports.

"China is yet to enter the market for cotton as its Government has not announced the import quota. Also, it is yet to make any decision on its domestic crop, though indications are that importance will be given to food crop," said the sources.

Growers delight

Mr Nair said though exports were helping China to get cotton at competitive rates, the industry was happy that growers were getting remunerative prices. "We are all for growers getting good prices for their crop. Only then can we be assured of supply," he said.

According to trade sources, even the Union Government feels that exports should be in value-added forms, possibly garments, instead of raw cotton or yarn for that matter.

The industry is unable to pinpoint how much China has gained or will gain from import of Indian cotton. "Export prices of yarn are determined by the Government there. Therefore, we can't say anything on this," they said.

While exporting 47 lakh bales, spinning units could be importing around four lakh bales next season. Imports are mainly the long staple variety to meet its shortage.

Despite the growing regions in Maharashtra, Gujarat and Madhya Pradesh being hit by rains, cotton production during the next season is expected to be above 260 lakh bales. The Union Minister for Textiles, Mr Shankarsinh Vaghela, said in Ahmedabad during the weekend that cotton production would be around 260 lakh bales.

According to industry sources, production in Gujarat itself is likely to top 100 lakh bales, while in Maharashtra it could be 48 lakh bales.

Punjab output up

In North India, arrivals have begun and production in Punjab has been put at 27 lakh bales against 20 lakh bales last year.

"There has been not much of damage due to the rains," said industry sources.

According to Mr Nair, domestic consumption was likely to rise sharply in the coming years as spinning mills are adding capacity. "Nearly three lakh spindles are being installed currently," he said.

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