India garment exports may suffer on cotton yarn shipments

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MUMBAI (Commodity Online) : With the India government lifting curbs on cotton yarn exports, the textile industry in India may suffer; so believes the Tirupur Exporters Association (TEA) exporting knitwear and readymade garments over Rs 16,000 crore on an annual basis.
The TEA expressed shock on the DGFT (Directorate General of Foreign Trade) allowing cotton yarn exports earlier capped at 720 million kg on account of yarn prices sky-rocketing in 2010-11 season.
Currently, this has been lifted on condition that cotton yarn should be registered with the Directorate General of Foreign Trade (DGFT) prior to shipments.
The TEA feels that the move would raise prices of cotton yarn in the domestic industry, according to industry quotes in Financial Express.
Many countries are already importing cotton yarn from India to manufacture garments. They are having advantages in the form of convenient bank interest rates, refund of VAT as well as low power costs. Naturally, these yarn importing countries would be able to compete with India as cost leadership is on their side.
Eventually this would be toppling Indian garment exporters. Once the customer loyalty is lost it is very difficult to reclaim it, Financial Express mentioned TEA president, A Sakthivel, as saying.
Several thousands of people may lose jobs, it is feared.
During 2009-10, India’s garment exports earned $10.64 billion in revenues. The industry employs 7 million people.

(Source: http://www.commodityonline.com/news/India-garment-exports-may-suffer-on-cotton-yarn-shipments-37821-3-1.html)

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