India: Cotton yarn exports to China will remain competitive

Market News

India: Cotton yarn exports to China will remain competitive

According to the Cotton Textile Export Promotion Council (TEXPROCIL), the Indian cotton yarn exports in 2013-14 are expected achieve a volume of about 1.350 mln metric ton. In a recent press release, Manikam Ramaswami, Chairman of the council said that 1.08 mln metric ton of cotton yarn export was achieved in the first 10 months of the FY 2013-14. He also added that the export of yarn slowed down in last two months of the financial year (March & April) as India’s domestic cotton prices went above the international price levels which hampered the exports. Here to note that the currency exchange rate fluctuation of INR & RMB against US Dollar also had adverse impact on the export of cotton yarn to the largest consumer.

In recent months, Indian rupee strengthened while China’s RMB devalued against the US greenback making export from India less attractive. Also, after the recent changes in the Chinese cotton policy and thereby reduced local cotton prices in China has created furore among the domestic cotton yarn exporters.

However, TEXPROCIL’s study indicates that Indian cotton yarn prices are still highly competitive in comparison to China’s locally produced yarns even after payment of import duty and local taxes in China. “Given the quality of Indian yarn, there is no reason for Indian textile mills to worry of a drop in yarn exports. Even if the difference between international and Chinese domestic price for cotton yarn will narrow down, the demand for yarn from India will be good” Ramaswami said.