Cotton yarn, fabric exports post dismal growth in Dec

Exports of man-made yarn and fabrics in dollar terms grew by 6.77 per cent in December last year over the same month in 2016, while cotton yarn and cotton fabric exports have seen a dismal growth rate of 0.38 per cent.

According to the central government’s quick estimates of exports of some major commodities for December 2017, cotton yarn, cotton fabrics, cotton made-ups and handloom products, among others, grew by 0.38 per cent to $938.57 million, as compared to $935.05 million in December 2016.

On the other hand, man-made yarn, man-made fabrics and madeups, among others, saw a decent growth rate of 6.77 per cent in December 2017 at $416.91 million, as against $390.47 million in the corresponding month in 2016.

According to cotton ginning, spinning and textile mills, the trend has been predominantly led by rise in the commodity prices, which now stand at ~42,000 per candy of 356 kg, along with dearth of export incentives. In terms of quintals too, cotton prices have grown by 11 per cent from ~10,517 in November 2017 to ~11,670 per quintal now.

“After the goods and services tax (GST) implementation, several important export incentives are not available. This has led to sluggish demand in the textile value chain for cotton products, leading to marginal growth in both exports and domestic market,” said Paritosh Aggarwal, managing director, Suryalakshmi Cotton Mills.

The rise in cotton prices in recent times has made exports of cotton products more challenging by making Indian exports uncompetitive against other competing exporting nations such as Bangladesh.

“With Bangladesh being able to export on a free trade basis, India’s cotton exports have become even more uncompetitive. Hence, price rise, as well as a dearth of incentives from the government after the GST, has made exports growth difficult,” said Aggarwal.

According to Arvind Raichura of Balkrishna Ginning and Pressing Factory, domestic sales and exports in December were also low due to lower capacity utilisation. “This is owing to the festive mood in the latter part of December, when capacity utilisation fell. Moreover, with export demand lagging, fabric manufacturing companies reduced demand from spinning and ginning mills,” said Raichura.

A lack of export incentives has hit the cotton ready-made garments (RMG) most, with the vertical posting a decline of 8.08 per cent in December 2017 over December 2016. Cotton-based RMG exports stood at $1,336.63 million in December 2017 as against $ 1,454.17 million in December 2016.

The Apparel Export Promotion Council (AEPC) taken up the matter with the government, having made representation for restoring duty drawbacks and other incentives that the industry was dependent on for exports.