In the first six months of this financial year, cotton yarn exports declined 10 %, mainly due to policy lapses, according to Confederation of Indian Textile Industry. Sanjay Kumar Jain, chairman of the confederation, has said in a press release that cotton yarn exports between April and September in 2016 was 517 million kg and it was 464 million kg during the same period this year. In 2013-14, spinning mills took advantage of the 2 % incremental export incentive, 2% interest subvention, and 3 % focus market incentive. In 2014, these incentives were withdrawn and cotton yarn exports in 2016-17 registered 26 % decline in value terms.
Mr. Jain said that the country exports almost 20 % of its cotton produced. During the current cotton season, the prices might touch minimum support price level as the production is expected to be high. According to the Financial Stability Report of the Reserve Bank of India, textiles has one of the highest levels of non-performing assets. When exports benefits such as MEIS and IES were introduced, all segments of the textile value chain were covered except cotton yarn. Thus, cotton yarn exports to China dropped. “Withdrawal of export incentives for cotton yarn has reduced our competitive edge by increasing our prices to the tune of 5 % to 6 %.”
The 3 % IES benefit is essential to maintain six to nine months cotton inventory and to ensure consistency in quality of yarn supplied. He appealed to the government to restore the MEIS and IES benefits for cotton yarn.