Cotton yarn export restriction waiver shocks industry

Our Bureau Coimbatore | Updated on April 01, 2011

The Directorate General of Foreign Trade's notification on removal of restriction on export of cotton yarn has sent shock waves within the knitwear cluster in Tirupur.

Knitwear exporters vow that this decision would directly impact the downstream sector, more particularly now, when Tirupur is reeling under pressure as dyeing units shut shop on one hand, and cotton yarn prices rise on the other.

“The removal of the restriction would trigger the price of cotton yarn further, notwithstanding the supply shortfall in the domestic market. The alarm bells have already started to ring. It is bound to worsen in the coming days,” Tirupur Exporters' Association President Mr A. Sakthivel said.

In a communication to Mr Anand Sharma, the Union Minister for Commerce and Industry, Mr Sakthivel reiterated the sector's plea on calibration of yarn exports month-wise/ quarter-wise, imposition of count-wise cap from ones to forties (count) and fixing the export ceiling at 720 million kg, as in the earlier fiscal.

He pointed out that over 90 per cent of the cotton yarn exports were happening in counts from ones to forties, which were in demand in the domestic market as well.

While pleading for immediate intervention to save the garment sector, Mr Sakthivel said the competing countries — which have inherent advantages of bank interest rates, refund of value-added taxes and power cost, among others — would eat into the market share of Indian garment producers resulting in loss of forex revenue to the country.

“The sector has made huge investments after availing finance from banks. Now, we will not be in a position to service the loan,” he said.

Published on April 01, 2011

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