India turns cotton importer despite record crop

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NEW DELHI, AUG 1:

Textile mills have started importing cotton and are likely to purchase 2 million bales in 2011-12 marketing year ending next month, as excess exports have led to shortage of the fibre in the domestic market.

India, the world’s second largest cotton grower, has exported about 12.5 million bales (of 170 kg each) in 2011-12 marketing year (October-September) so far.

“There is a shortage of cotton in the domestic market as about 12.5 million bales of natural fibre have been exported and arrivals are also less,” a Textiles Ministry official said.

Textile mills have started importing cotton mainly from the US and Africa and are expected to purchase a total of 2 million bales this year, the official said.

“As of now, mills have imported 0.5 million bales of cotton and have contracted for over 1 million bales,” Confederation of Indian Textile Industry (CITI) Secretary General Mr D K Nair said.

With domestic prices ruling higher than that in the global markets, the Textiles Ministry official said that mills are importing cheaper cotton to meet their domestic demand.

The natural fibre prices in India are 10 per cent costlier at Rs 38,000 per candy compared to the global market.

The official, further, said mills are facing difficulty in sourcing cotton as arrivals have come down plus the exportable surplus has come to negative because of huge exports.

Based on arrivals, total cotton production is seen to be 33.6 million bales in 2011-12 marketing year, much lower than the Agriculture Ministry’s estimate of a record 35.2 million bales for the same period. The domestic requirement is about 26 million bales.

Going forward, industry experts feel that situation might get worse in the next marketing year as some parts of the major cotton growing states like Gujarat and Maharashtra are facing drought-like conditions.

Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article3712202.ece

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