The Indian apparel industry says the government's decision to cap cotton yarn exports at 72 crore kg in 2010-11 is likely to bring down prices in the domestic market.
"The cap is expected to bring some stability to high cotton yarn prices, thus increasing the availability of yarn for domestic apparel manufacturers and exporters," Apparel Export Promotion Council (AEPC) Chairman Premal Udani said in a statement.
According to industry experts, prices of cotton yarn have increased by about 85 per cent over the last nine months.
The move has brought major relief to the apparel sector and will help create more jobs, the AEPC said.
Total cotton yarn production in 2010-11 is projected at 346 crore kg, whereas domestic demand is pegged at 265 crore kg.
Earlier, the government had fixed a ceiling of 55 lakh bales (weighing 170 kg each) on raw cotton exports in the current crop year to help domestic textiles companies, which were rapidly losing ground in international markets on account of the cascading effect of high prices of the natural fibre.
The cotton season runs from October to September.
The apparel exports industry has been strongly advocating the need to convert the raw material into value-added products within the country by disincentivising raw material exports.
Besides a quantitative cap on exports, the council has been seeking the imposition of export duty on cotton yarn.
The AEPC said that given the seasonal nature of demand from the industry, cotton yarn exports should be allowed in a calibrated and phased manner to ensure adequate supply in the domestic market throughout the year.
Apparel exports during the April-September period stood at just USD 5.02 billion, 7 per cent less than in the corresponding period last year, on account of a slowdown in demand from Western markets like the US and Europe in the wake of the global economic crisis.
The apparel industry employs about seven million people in the country and almost half of them are engaged in export- oriented activities.
