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Coimbatore: With cotton prices remaining stable and ruling at lower levels compared to the international market, textile mills have seen a sharp improvement in their fortunes.

Export of cotton yarn, fabric, made-ups and handloom products surged 18% year-on-year (y-o-y) or by $884 million in April.

 

“The yarn market has gained momentum in recent times and the unsold yarn stock level is one of the lowest in the recent years,” said P Nataraj, chairman, Southern India Mills’ Association (SIMA). “The demand for coarse and medium counts, especially open-end yarn, both in the domestic market and export market has increased considerably and several mills have got advance booking for few months,” he stated.

 

“Taking advantage of increased fabric demand, yarn prices have increased during the middle of May when compared to the previous month,” the SIMA chairman said. Prices of the 30s and 40s count hosiery yarn have increased by Rs 5 per kg on an average in the middle of May. Similarly, yarn used for weaving has seen a price increase of Rs 3-7 per kg. “Some mills are booked up to June for fast moving yarn counts,” said K Selvaraju, secretary general, SIMA.

 

Cotton prices are ruling lower than the international market giving mills the much needed momentum, especially in the export market. Prices of Shankar-6, the popular cotton variety used by mills, are ruling at around Rs 43,000 per candy (a candy is about 355 kgs). The landed cost for imported cotton of a similar variety works out to Rs 48,000-50,000 per candy.

 

The demonetisation and GST, brought by the government within a span of eight months, had a big impact on the performance of the textile industry. The industry registered only 5.37% export growth during 2017. Textiles and clothing exports increased from $35.5 billion in 2016 to $37.4 billion in 2017.

 

India, however, managed to remain as the world’s second largest textiles and clothing exporter accounting 4.95% global share, while China, the largest exporter accounted for 34.2% share during 2017. Though India retained its position as the largest cotton yarn exporting country in 2017, Vietnam is fast catching up, industry officials said.

 

Vietnam, which had 11.93% share in the global cotton yarn trade during 2015, increased it to 18.13% in 2017 registering a 23.93% y-o-y growth during the year as China shifted its major volume of yarn imports from India to Vietnam. Vietnam cotton yarn attracts zero duty while Indian yarn attracts 3.5% duty in China.

 

“The Indian spinning sector’s long pending demand of extending the MEIS (Merchandise Exports from India Scheme) benefit for cotton yarn export is yet to be considered,” the SIMA chairman said. “If considered, this would enable the Indian spinning segment to have a level playing field and utilise the surplus spinning capacity and also convert the 60-70 lakh bales (a bale is 170 kgs) of raw cotton being exported into value added yarn,” he said.

 

Source : Times of India

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