Spinning industry to boost yarn exports looking for more benefits

The domestic market for cotton yarn is more lucrative than exports. This was confirmed by the India’s cotton yarn export numbers released by the Ministry of Commerce and Industry. 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 billion during 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.

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 realization, 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.

According to industry experts, the drastic drop in the offtake of cotton yarn by China has hurt the Indian spinning industry the most in the textile value chain.

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.

An industry source said that they 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 their plea.

Due to trade barriers against Indian textiles in the US and European markets, small textile exporting countries such as Vietnam and Bangladesh have been taking advantage in global trade.

According to India Ratings & Research (Ind-Ra) report the share of Indian textile industry in FY 18 could see an increase with the Centre’s stimulus and implementation of Goods and Services Tax (GST) and also with the US’ exit from the TPP.