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IMPRESSIONS from a Cross-section

Mr. Anilkumar Agarwal
Mr. Anilkumar Agarwal
CMD
Durgesh Impex Pvt. Ltd.

Company Details

Business Area:
cotton ginning & trading
Turnover:
INR 300 cr
Export Capabilities:
250,000 bales/year (approx.)
Clientele:
China, Bangladesh & India

 

Please share with us your overview on cotton exports, its prospects and hindrances in India.

Exports of textiles & clothing from developing countries in the past have long faced restrictive blocks to their exports called “quotas”. In 1962, a long term agreement (LTA) was initiated which later on got replaced by “Multi Fibre Agreement, 1974 (MFA)” which was for synthetic, woolen products besides cotton.

The objective of “MFA” was to allocate export quotas to the low cost developing countries, listing the amount of imports to countries whose domestic industries were facing serious challenges from rapidly increasing imports. It sought to expand trade, reduce barriers to trade and progressively liberalize world trade.

In January 1995 they eliminated quotas on 16% of 1990’s import volume of textiles & apparels, in January 1998 another 17% was eliminated, another 18% in 2002 and the final “MFA” in January 2005 eliminated quotas on remaining 49%. This was to accelerate stiff competition and cost effectiveness in production and “pricing” in international market.

Govt. of India initiated cotton export in 1990 with a quota of 500,000 Indian cotton bales. Over the years, India’s cotton export has been growing rapidly. In 2007-08 export reached to 8.8 million bales, during 2009-10 it rebounded to 8.3 million bales & lately in 2011-12 exports have touched to 9 million lakh bales.

The steep increase in cotton prices during 2010 to a historic high level around Rs. 60,000/candy created turbulence. Domestic market faced “threat of survival”. The Govt. of India initiated intervention by some policies such as export duty on raw cotton (Rs. 2500/ton) and banning export of cotton during mid 2010. Further, the govt. imposed cap on cotton export up to 5.5 million bales, later increased to 6.6 million bales. Though the govt. earned record revenue from export in 2010-11, it featured high uncertainty in textile industries & world. Such frequent ban on cotton export & then lifting ban tarnished the image of the country. World leading countries ranked India as “non reliable” partner in international trade raising the issue in “WTO”.

(Contd.)

Please share with us your overview on cotton exports, its prospects and hindrances in India.

India is the second largest cotton growing country having largest acreage of land of 11 million hectares for cotton cultivation; however, it has poor yield of approx. 475 kg/ha unlike other countries as shown in the table:

Country

Area (million ha)

Yield (kg/ha)

Production (million 480lbs bale)

China

5

1326

33.5

India

11

475

26.5

Usa

4.25

910

15.57

Pakistan

3.1

721

10.6

Brazil

1.4

1415

9.1

World

33.88

760

123.04

One single most technological development in cotton cultivation is the introduction of BT (bacillus thuringiensis) cotton which was welcomed by the farmers owing to higher yield. Gujarat, Maharashtra and Andhra Pradesh together account for 3/4th area under cotton cultivation. Gujarat has the highest contribution in cotton production at 11.5 million bales followed by Maharashtra at 8.2 million bales. However, in comparison to Gujarat, where the yield is around 650 kg/ha, Maharashtra has poor yield of 332 kg/ha. Differences are due to agro economical condition. Cotton produced in north India such as Punjab having “irrigated land” have yield above 700kg/ha in comparison  to dry land. Thus, by improving land and soil condition by improved irrigation & agro economical condition, production and productivity can be improved in India further to assist requirement in the domestic or export market. 

(Contd.)

Please share with us your overview on cotton exports, its prospects and hindrances in India.

Country

Share (%) cotton production

share (%) cotton consumption

China

30.60%

40.70%

India

21.90%

16.90%

USA

13.30%

3.30%

Pakistan

8.40%

9.40%

China, the world’s largest textile producer is also the importer of cotton; whereas Bangladesh, Turkey, Pakistan are other major. China imported 3.241 million tons in 2011-12, whereas Bangladesh too imported 4.1 million bales during 2011-12.

Recent world supply and demand estimates (in ‘000 tons) ensures ending stock is sufficiently enough. (Year 2012 - 13)

 

Beginning stocks                      

Production  

Consumption

Ending stocks

USDA

14,561

25406

23,914

16057

ICAC

13,128

25470

23960

14630

 

Recommendations/Expectations from the govt.:

  • It is recommended to allow minimum of 5 million bales export for first few years out of 33 million bales stock, maintaining 28 million bales for domestic consumption.
  • Eliminate essential item “cotton” from commodity trade to avoid “speculation” pricing.
  • Allocate small proportion, quantity barred export permit to every exporter for healthy promotion of export.
  •  Review minimum support price, evaluate with respect to field provision of cash subsidy to farmer as that in US, China, EU. 

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Published on: 18/05/2012

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.