The Hindu Business Line : Will TN mills’ euphoria on African cotton import last long?

Coimbatore, April 10 For the raw cotton-starved textile mills in Tamil Nadu, the timing of the Prime Minister’s initiation on a duty-free tariff preference scheme (DFTP) of imports from African countries could not have come any sooner.

This scheme provides an opportunity to import quality African cotton by the Indian mills, provided the nitty-gritties of the scheme meet the aspirations of the industry here, feel a crosssection of the southern textile industry.

With most textile mills’ immediate requirement being 28mm/29mm (fibre length) cotton, the equivalent of the Sankar-6 cotton varieties grown largely in Gujarat, African cotton could match this need.

But will the scheme translate in time into a reality so that the mills in Tamil Nadu take advantage of this window of imports are what haunts the textile entrepreneurs here.

“We find the scheme definitely as one more avenue for import of cotton duty-free which will be an advantage, especially when quality cotton is not available in India right now”, feels Dr K.V. Srinivasan, Chairman of the apex textile body Southern India Mills Association (SIMA).

But the SIMA chief wants to wait for the Centre to come out with the details of the scheme.

His perception being that this duty-free import route will be suitable for most mills to go for forward contracting of African cotton to tide over the mills needs during lean cotton season in India.

The current turmoil facing the region’s textile producers is aggravated by the flight of quality cotton from the market, which the mills blame it on free export of cotton allowed resulting in domestic cotton prices soaring by about 20% compared to what it was six months ago, and rising interest cost.

The announcement of DFTP for African imports has thus created euphoria among the textile industry and the trade.

Though India is not new to importing cotton from Africa, the element of duty-free nature provided has elicited interest among the end user- industry here.

At present, hardly any cotton is imported because of the high international prices for the commodity.

Not much of cotton, other than the extra long stable varieties, was imported in the last three years and wherever imported they were done under the advance licence or DEPB schemes for re-exports, according to Mr K.N Viswanathan, Secretary, South India Cotton Association (SICA).

The international cotton price quote at 67 cents per pound which works out the imported cotton price tag at Rs 29,000 a candy as compared to the prices of domestic cotton at Rs 23,000/Rs 24,000 is found to be high. The duty-free element thus will give the needed pep to those who consider import. But the decision to source African cotton should meet the Indian consumers motive behind their imports, namely whether it would replace the domestic cotton variety at short supply at present.

If so, whether it would work out cheaper than the latter, said Mr Viswanathan.

Mr J, Thulasidharan, Managing Director of The Rajarathna Mills Pvt Ltd, is of the view that the DFTP scheme will work out for those who aim for shipments four months from now, say for imports between July and September and in the event of the international prices going down by another three/four per cent, it would meet the price aspiration of Indian consumers.

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