A steep 11 per cent rise in cotton prices during the past two months in India has spiralled up raw material costs for mills, making export unviable and uncompetitive. International cotton prices are also up 17 per cent but 2.7 per cent appreciation in the Indian rupee has nullified all gains to be had from international cotton prices. While cotton yarn and cotton fabric exports have seen a pathetic growth of 0.38 per cent year-on-year in dollar terms in December 2017, however, for man-made yarn and fabrics it grew by 6.77 per cent.
Central government's quick estimates of exports for some of the major commodities for December 2017 are: cotton yarn, cotton fabrics, cotton made-ups and handloom products, among others, grew by 0.38 per cent to stand at $938.57 million, up from $935.05 million in December 2016. On the other hand, man-made yarn, man-made fabrics and made-ups, among others saw a decent growth of 6.77 per cent in December 2017 at $416.91 million, as against $390.47 million in the corresponding month last year.
Paritosh Aggarwal, MD of Suryalakshmi Cotton Mills says, "With Bangladesh being able to export on free trade basis, India's cotton exports have become even more uncompetitive. Hence, price rise as well as dearth of incentives from government post GST has made exports growth difficult." Arvind Raichura of Balkrishna Ginning and Pressing Factory, says domestic sales and exports in December were also low due to lesser capacity utilisation. "This is owing to 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." Lack of export incentives hit the cotton ready-made garments (RMG) the most, posting a decline of 8.08 per cent in December 2017 as against 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) has also been taking up the matter with the government, having made representation for restoration of duty drawback and other incentives that the industry was dependent on for exports.
