In a bid to help spinning mills clear accumulated stocks, the Centre on Thursday lifted quantitative restriction on exports of cotton yarn.

A notification by the Directorate-General of Foreign Trade (DGFT) said that cotton yarn exports that had been restricted so far will now be allowed free. However, exports will have to be registered with the DGFT.

Last fiscal, the Centre had fixed a quantity restriction of 720 million kg on cotton yarn exports.

“The decision should help spinning mills since not a single yarn was exported in the last three months,” said Mr D.K. Nair, Secretary-General, Confederation of Indian Textile Industry.

With demand being lukewarm in the domestic market, cotton yarn consumption had dropped drastically.

“The garment sector slowed down, especially due to problems in Tiruppur, while the fabric industry has not grown at the pace the spinning sector has expanded,” said Mr Nair.

This move will help to the extent of demand in the international market.

Asked if it would have any effect on cotton prices, Mr Nair said cotton had already peaked and was ruling at a record Rs 62,000 for a candy of 356 kg.

“If you see today's yarn prices and what mills pay for cotton, the survival of mills is difficult,” Mr Nair said.

The move to allow unrestricted yarn exports is expected to help spinning mills.

According to reports, a few small and medium size spinning mills in the South had closed due to lack of demand. Also, high prices for cotton and lower rates for yarn made their working unviable.

Yarn exports were restricted last year on the heels of garment manufacturers complaining of high yarn prices. But with yarn prices dropping and demand not taking off, the Centre decided to make exports unrestricted.

The decision could also see stocks of listed spinning mills gaining on Friday.

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