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The Ministry of Textiles is writing to the Ministry of Commerce and Finance to restore export benefits under focus market scheme (FMS) for cotton and cotton yarn.
"We are weighing this and will write to the ministry of finance and commerce to withdraw the decision to remove export benefits under focused markets scheme," KS Rao, union textile minister said on the sidelines of a Ficci conference.
Latin America and Africa came under focused markets for cotton yarn exports scheme. The scheme was withdrawn three weeks ago. The withdrawal was expected to impact cotton yarn exports in a big way.
The scheme was initially started to increase India's competitiveness and allowed a duty credit of 2.5% of free-on-board value of exports to that came under FMS.
Peru sources 90% of their cotton yarn from India and with this restriction coming into play India will loose its competitive edge and lose out on the pricing power.
Also, incremental exports which is around 25 to 30% of India's total cotton yarn exports has also been withdrawn which also have a bearing on India's cotton yarn exports.
Due to this the total impact is estimated to be around 35% on total cotton yarn exports. So far, India was the dominant player in these markets. Pakistan , Turkey and Indonesia were other major exporters of cotton yarn to these regions.
"The total impact of these incentive draw backs is expected to be around 35% on the over all exports of cotton yarn,” D K Nair, secretary general of Confederation of Indian Textile Industry (CITI).
This year, due to heavy import demand coming in from China and also with exports to Latin America and Africa initially cotton yarn exports were expected to touch an all time high but now with the drawbacks exports are expected to suffer.
