Indian import of Chinese cotton yarn up after US ban on Xinjiang goods

28 Sep '22

3 min read

Pic: Shutterstock.com

India’s imports of cotton yarn other than sewing thread (HS code 5205) from China have seen a multi-fold jump recently. Murmurs about the increase in imports are being heard in the domestic market and Fibre2Fashion’s market insight tool TexPro indicates the same. According to trade sources, imports are around 20 per cent cheaper but the volume remains low.

In terms of volume, India’s imports of cotton yarn from China jumped by four times in June compared to May 2022 and witnessed a mild month-on-month growth in July 2022. The imports went from 32,765 kg worth $67,023 in May to 151,962 kg worth $7.54 lakh in June this year. The imports stood at 187,928 kg cotton yarn worth $7.28 lakh in July 2022, as per TexPro.

It may be noted that the US had imposed a ban on cotton and cotton products produced in Xinjiang due to alleged human rights violations and forced labour in the region. The ban came into effect from June 2022 this year. Cotton and cotton yarn prices have witnessed a sharp fall in China following the ban.

Cotton yarn imports to India from China were at 13,399 kg ($14,982) in April, 14,318 kg ($67,924) in March and 36,307 kg ($221,872) in February 2022, according to TexPro. On a yearly basis, India’s cotton yarn imports from China stood at 414,868 kg ($2.348 million) in 2021, 577,172 kg ($2.515 million) in 2020, 806,298 kg ($3.732 million) in 2019 and 1,659,287 kg ($7.997 million) in 2018. The imports amounted to 466,623 kg ($1.916 million) during January-July this year.

According to market sources, the landed cost of Chinese cotton yarn is around 20 per cent lower than domestic prices. Cotton yarn attracts about 18 per cent basic custom duty and other taxes but Chinese cotton yarn is cheaper despite the taxes.

Industry experts said that Chinese cotton yarn, even if it was produced from cotton from the Xinjiang region, can be consumed for products manufactured for domestic and non-US international markets. Some sources said that cotton yarn is being imported by consumer industry, which indicates that the weaving industry is importing Chinese cotton yarn. Thus, the product is not being traded but is directly reaching the consumer industry.

However, the market is not worried about the imports as the volume is relatively low. A trader from Tiruppur told Fibre2Fashion, “The volume of monthly imports is not alarming yet. The government will not allow flooding of Chinese cotton yarn amid new crop arrival.”

Fibre2Fashion News Desk (KUL)

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