In the past two months alone, China has bought 140 million kg of cotton yarn from India, about 75 per cent more than usual, says K. Selvaraj, Secretary General of the Coimbatore-based industry body Southern India Mills Association. China is becoming uncompetitive in yarn making with the currency appreciation and high labour costs. China is known to maintain a consistent policy for longer duration so we can expect the import of yarn by China to continue. The increase in the yarn export from India, helped by the rupee depreciation by almost 17 per cent in the last couple of months and continues so, the demand of cotton yarn is expected to benefit from the pickup in domestic demand.
On the other hand, commenting on cotton availability status Selvaraj claims that there is no panic situation, we can even manage for more yarn export as in the coming year cotton production is being expected to be between 375-400 lakh bales compared to 335 lakh bales in current year. “India may need to import some cotton even if we export more yarn. There is another positive sign also as in the last two months power availability has increased in Andhra Pradesh and Tamil Nadu, so mills are using 25 per cent more spinning capacity as compared to earlier time.
Although The Cotton Yarn Advisory Board (CYAB) has projected a 14.2 per cent increase in cotton yarn production to 4,000 million kg in 2013-14, the total demand is expected to increase by 44 per cent to 3,900 million kg during this fiscal. Is this scenario not a worry sign for apparel exporters? D K Nair, Secretary General, Confederation of Indian Textile Industry (CITI) says, “No, it is because yarn overall production has increased not affecting the domestic mill requirements; and while the cotton procurement price has increased in last few weeks but not the yarn price. So I don’t see any such reason for its having impact in the garments export. As far as import of yarn by China is concerned, earlier it was import cotton from India but now it has decreased the cotton import and increased the yarn.”
