Cotton yarn export doubles in March but more of a base year effect
Cotton yarn shipments doubled to 113 million kg worth US$360 million (INR2,311 crore) in March 2018 from previous March. This was mainly due to a low base. In March 2017, exports were botched by the demonetisation of high currency notes which hampered the traditional or conventionally businesses done on cash basis.
Farmers were reluctant to participate in selling activity with new currency (or changed notes) getting slower into the circulation. Further mills were short of cotton and facing logistic issues, which is again mostly a cash-based business. Overall, exports were hit severely since production was slower.
Cotton yarn production declined 3% year on year in December 2016 and by 2% in February 2017 and remained on the downtrend till September 2017. This had an adverse impact on cotton yarn exports which remained affected until July 2017. Cotton export declined 40% in March 2017. The doubling of exports in March in value term is only 30% rise compared to March 2016, and this came from 21% increase in prices. So, volumes have grown just 7%.
Further, exports were impeded by the newly launched GST regime in July. The processes and rules were tweaked over the period but could not boost export. March numbers also reflects unsustainable scramble for export target achievement by textile companies.
In March, as many as 74 countries imported cotton yarn from India at an average price of US$3.19 a kg, US cent 1 more than previous month and up US cents 5 from last year. China sharply increased its import by 180% in volume and value and was top importer during the month. It was followed by Bangladesh with volume and value both more than doubling over the year. Portugal and Egypt were the other major importers, also doubling their imports from India. Peru was the fifth largest destination.
Only 5 countries did not import any cotton yarn from India as they did last March but were replaced by seven other countries which imported yarn worth US$0.70 million. Israel, Greece, Algeria, Montenegro and Bulgaria were among the fastest importers of cotton yarn in March while Jordan, UAE and Russia significantly reduced their import compared to last year.
About 62% of cotton yarn exported in March were combed yarn with average unit value realization of US$3.51 a kg. Carded yarn accounted for 29% of total export at a unit value of US$2.88 per kg.
Indian textile industry still lacks value addition even in basic products. This is evident from the 95% of the shipment during the month were of grey yarns.
Spun yarn export jumps in February only to cover fall of January
