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Cotton imports has jumped sharply as the high Minimum Support Price (MSP) fixed by the Government is holding domestic prices at an elevated levels despite demand remaining weak.
As of August-end, cotton imports jumped multi-fold to 23 lakh bales against 8 lakh bales logged in same period last year, said India Ratings and Research report.
With local prices remaining artificially higher than international prices, cotton imports are set to rise further, it said.
Globally, the rating agency expects cotton prices to fall further due to higher production.
Cotton yarn exports continues to see reduced exports owing to the low demand and increased competition. Yarn exports fell 40 per cent month-on-month in July, largely due to an 80 per cent fall in demand from China which has entered into second phase of free trade agreement with Pakistan on goods worth $64 billion. The pact includes cotton yarn which directly competes with India.
Apparel exports are seeing a moderate recovery with the stabilising demand from the United States (US). The US-China trade war seems to have no major impact as the apparel exported by China for July were 35 per cent higher than those in the previous month. India is yet to see the benefit in the trade war, as only a 10 per cent m-o-m increase in exports was recorded in July.
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