Chennai: Cotton yarn exports are declining at an alarming rate as the shipments shrunk by 50 per cent in June and 35 per cent in the June quarter.
The total yarn export value for the past quarter stood at $696 million, 35 per cent down from $1063 million in the year ago quarter. The exports have been falling steeper month-after-month. In April, shipments declined by 21 per cent to $266 million from $337 million in April 2018. In May, a decline of 31 per cent was reported when the country exported just $241 million worth yarn. By June, yarn exports fell 50 per cent to $188 million against $378 million in June 2018.
According to the yarn producers, lower demand from both export markets and the domestic market has hit the industry.
“Exports are down, mainly due to lesser offtake by China,” said K Selvarjau, Secretary General, South Indian Mills Association.
Indian yarn became less competitive in the international market after the Rebate on State Levies scheme was withdrawn. Higher cotton price also is making Indian yarn costlier. The Minimum Support Price of cotton in India is 25 per cent higher than the international rate, said G Balasubramanian, Secretary General, Northern India Textile Mills’ Association.
Due to higher Indian prices, China, our largest buyer, is now increasingly importing it from Vietnam, said Selvaraju. China has also given duty-free access for import of cotton yarn from countries like Paki-stan and Vietnam from April 1, 2019. Off-take by Bangladesh and S. Korea also has become lesser.
The domestic market too is sluggish. As the garment exports have slowed down, the home market is absorbing lesser yarn.
Financial Chronicle had recently written about how several mills are cutting down production and some have even stopped production. Almost 60 per cent yarn mills, which are largely small and medium units, have cut their production. Some of them have cut the number of working days while some others have cut down shifts.
