Persistent fall in cotton yarn exports raise concern

Our Bureau Mumbai | Updated on October 25, 2019

The export of cotton yarn in the first six months of this fiscal year declined 39 per cent

The continuous fall in cotton yarn exports since start of this fiscal has raised concerns in the textile industry. In fact, shipments logged a negative growth in all the months from April.

The export of cotton yarn in the first six months of this fiscal year declined 39 per cent, and in value terms, it almost halved to $1.28 billion, against $2.09 billion logged in the same period last year.

KV Srinivasan, Chairman, the Cotton Textiles Export Promotion Council, said that the continuous fall in exports of cotton yarn is a matter of deep concern, with shipments to leading markets such as China, Bangladesh, Vietnam, South Korea, Colombia and Turkey having fallen significantly.

Moreover, export of value-added products, such as fabrics and made-ups, have grown just two per cent so far this fiscal.

“The falling exports along with lukewarm domestic demand has led to closure of many spinning mills,” he said.

Multiple disadvantages

Cotton yarn is the only product which has not been granted export benefits such as Merchandise Export Incentive Scheme (MEIS) and three per cent interest equalization scheme.

In addition, exporters of cotton yarn are at a serious disadvantage compared to competing countries due to differential import duties in leading export markets.

The import duty ranges from 3.5 to 5 per cent on cotton yarn exported from India to major markets such as China, EU, Turkey and South Korea as against zero duty paid by exporters from competing countries such as Bangladesh, Cambodia, Pakistan, Indonesia and Vietnam.

Cotton yarn exporters also bear the incidence of State and Central taxes; no rebate is given for these as done in the case of made-ups and garments.

The government should include cotton yarn under the MEIS, 3 per cent interest equalisation scheme and the ROSCTL (Rebate of State Levies & Taxes) Scheme to boost exports and benefit farmers, he said.

Published on October 25, 2019

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