The Indian spinning industry, undergoing a rough phase since last year due to high volatility in cotton prices, may breathe a sigh of relief now with the government banning cotton exports. This year, they expect to surpass the target for cotton yarn export.
The cotton yarn industry was in doldrums last year due to high input cost, power shortage and sagging demand in international markets.
Cotton prices reached a peak of Rs 65,000 a candy (356 kg each) a year ago on huge offtake by exporters, putting the spinning industry in jeopardy.
Industry veterans expect cotton yarn exports to cross the target of 875 million kg by March.
D K Nair, secretary general of the Confederation of Indian Textile Industry, said the situation was improving thanks to the revival of the US economy. The uncertainity in the European market was a cause of concern, as major buyers of Indian yarn (Korea and China) sell their finished products mainly in the European markets. So, the financial turmoil in Europe may have a cascading effect on Indian spinning mills.
Stable demand in international markets and availability of yarn have propelled spinning mills into action.
According to S P Oswal, chairman, Vardhman Group, “The availability of an additional three million bales of cotton (as a consequence of limit on exports) may help spinning mills to operate for another two months and help the yarn industry meet the target of 875 million kg of exports.”
This, since exp-orters had applied for registration of 12.5 million bales and had covered most of the cotton requirements from the market.
Oswal said the lack of consistency in India’s export policy puts exporters on the backfoot.
India exports 60 count and above or fine yarn to European countries where demand issues exist. Fine yarn is mostly manufactured in south India, while northern spinning mills produce coarse or 40 and below count yarns, exports of which are doing well.
While mills in the north are picking up, those in the south are caught in a difficult situation. Despite a revival in international demand, the mills are utilising only 50-60 per cent of their capacities. Acute power shortage and high cost of captive power has restrained millers from seeking fresh orders.
“Tamil Nadu and Andhra Pradesh have 55 per cent spindleage of the country and inadequate power availability has limited their functioning,” said K Selvaraj, president of South India Mills’ Association.
The commissioning of wind power projects of 2,500-3,000 Mw may help mills in the south to overcome power blues, he added. Industry associations across India want the government to do away with ad hocism in export policy to reap the advantages of globalisation.
