Spinning Industry Seeks More Sops to Boost Yarn Exports

  • 14-Mar-2017
  • Spinning Industry Seeks More Sops to Boost Yarn Exports

Blame it on increased spindleage or faltering demand for cotton yarn — the alarm bells seem to be ringing with piling inventory of yarn on the one hand and production halt by the powerloom, handloom and made-up sectors for close to a fortnight now.

Industry sources say the domestic market for cotton yarn is more lucrative than exports.

And India’s cotton yarn export numbers released by the Ministry of Commerce and Industry confirm this.

The data reveals that there was a 1.4 per cent negative growth in India’s total exports during 2016 at $263.93 billion against $267.74 billionduring January-December 2015.

Export of cotton yarn, both in terms of volume and value dipped 11.6 per cent and 15.5 per cent respectively during January-December 2016 compared to the corresponding period of the previous year.

Drop in exports

Cotton yarn export dropped from 1,328 million kg (mkg) during 2015 to 1,175 mkg the following year and the value slipped to $3164 million from $3743 million.

But, during December 2016, cotton yarn export volume touched a high of 172.6 mkg against 114.9 mkg during the corresponding month of the earlier year, registering a 50.2 per cent growth. Unit value realisation, which during 2016 stood at $2.38/kilo of cotton yarn (compared to $2.82/kilo in 2015) further slipped to $2.11/kg in December 2016.

Thus, while the December 2016 cotton yarn export volume grew 50.2 per cent, in value terms, the growth was only 20.1 per cent.

“The drastic drop in the offtake of cotton yarn by China has hurt the Indian spinning industry the most in the textile value chain,” say industry experts.

No ground for exclusion

Industry sources aver that the Centre should consider extending the Merchandise Exports from India Scheme (MEIS) and Integrated Environmental Solutions (IES) benefit for cotton yarn as well, as all other products in the textile value chain have been included in the list.

“We have been demanding extension of MEIS to far-off destinations as it would help offset high cost of transportation, but the government has not relented to our plea,” an industry source told BusinessLine.

That’s not all. Small textile exporting countries such as Vietnam and Bangladesh have been taking advantage in global trade due to trade barriers against Indian textiles in the US and European markets.

While the present situation seems distressing, India Ratings & Research (Ind-Ra) report could possibly give some hope for the Indian textile industry in FY 18. “The Centre’s stimulus and implementation of Goods and Services Tax (GST) could push India’s textile exports,” the report notes.

A blessing in disguise

Ind-Ra believes that in FY18, India’s share in the global textiles and apparel trade could see an increase given US’ exit from the TPP (Trans Pacific Partnership) and the likelihood of tax rationalisation under GST. Further structural advantages in the form of dominance in cotton production, cost and quality competitiveness due to increasing integrated fibre to apparel/ made-ups capabilities, government’s stimulus to exports, declining interest rates and stable currency regime are expected to favour India’s export share.

Source: Thehindubusinessline.com

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