The quantitative ceiling of 720 million kg that the Ministry of Textiles has imposed on the export of cotton yarn during 2010-11 will have far reaching adverse consequences for all segments in the textile industry of India, the Confederation of Indian Textile Industry (CITI) said on Thursday.
According to a statement issued by CITI, the export authorisation registration certificates have already been issued for the entire quantity with a maximum period of 45 days for shipment. “This decision would push up yarn exports during the next 45 days considerably, since exports that would have normally taken place during four months up to March 2011 will now have to be made during the next 45 days. Mills will be forced to divert supplies from domestic market to export markets during this period, reducing availability for domestic consumers of yarn," said Shishir Jaipuria, chairman CITI.
The textile industry body stated that there was no shortage of cotton yarn in the domestic market so far, though there were complaints of inadequate availability from certain sections of the industry. But now there may be actual shortage for domestic consumers, though for a limited period, CITI stated.
"Following the restriction on cotton yarn exports from India, international prices for cotton yarn will shoot up, since India is currently the largest supplier of cotton yarn in the global markets. The other major cotton yarn exporting countries such as Pakistan, Turkey and Indonesia will be the major beneficiaries of this price increase," said Jaipuria.
For the spinning industry of India, the restriction will be a hard blow in many ways. “In the first place, they will find it difficult to honour some of the commitments made to their domestic customers, for the next 45 days. And after that, there may be a glut of cotton yarn in the country, since the domestic consumption can not match the increasing production of cotton yarn. During January-March 2011, cotton yarn exporters of the country will not be able to supply any yarn to their overseas customers who have been importing regularly from them for decades. This will affect their individual reputation as well as that of India as a reliable supplier of cotton yarn," Jaipuria stated.
Meanwhile, CITI has requested government to reconsider the decision to cap cotton yarn exports, in view of issues the decision would create. The government has also been asked to clear the pending quantity of around 60 million kg for which applications had already been accepted by Textile Commissioner before the ceiling of 720 million kg was announced, since it would be unreasonable to apply the quantitative ceiling retrospectively.