Cotton imports to India still low on high global prices; duty removal fails to boost imports

Despite the removal of 11% import duty on cotton imports, spinning and composite textile mills have not been able to import global cotton as prices of cotton are still hovering around Rs 90,000 per candy (356 kg per candy).

Cotton importers feel the duty removal came in too late as prices were already ruling high. Had the duty been abolished in February this year, Indian importers would have benefitted from low global prices then,

It was believed that following the removal of the duty, there would be huge imports into India, but most of the spinners are not showing interest as international prices of cotton are on the higher side. As per Cotton Association of India, the decision came a couple of months late and if it had been taken before February, prices of cotton might have remained under control.

“Spinning mills can’t afford to buy cotton at the current rate as weavers are not ready to pay higher prices of yarn. A handful of multinational companies have hoarded nearly 60 lakh bales of stock. Besides, due to cotton futures on platforms like MCX and NCDEX, cotton prices are artificially inflated. The government should put a stock limit on cotton storage as well as restrict future trading in cotton to protect not only the spinning industry but the entire textile value chain,” said Saurin Parikh, president of the Spinners Association of Gujarat (SAG) to Financial Express.

Cotton’s opening stock for the current season was around 75 lakh bales (of 170 kgs each), but the carry forward stock will be nearly 40 lakh bales. Farmers are still holding 15% crop which will translate to around 50 lakh bales. Almost 7 to 10 lakh bales are expected to arrive in the market from June to August from Tamil Nadu and Karnataka. In northern India, new sowing of cotton has been done and crops will come from August. As a result, cotton supply is likely to ease in the next 2-3 months. It is likely that sowing of cotton will increase by 15-25% as farmers in cotton growing states including Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh, Madhya Pradesh and Punjab may shift from other crops to cotton as they fetched excellent prices this year. 

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