The Confederation of Indian Textile Industry (CITI) has revealed that exports of cotton yarn declined by 35 per cent in the first quarter of FY20 to $696 million compared to $1.063 billion in the same period last fiscal. Of this, exports in April 2019 declined by 21 per cent to $266 million compared to $337 million in the same month previous year. Those in May declined by 31 per cent to $241 million against $349 million in May 2018 while those in June declined by 50 per cent to $188 million compared to $378 million reported in June previous year.

Cotton yarn exports have been on a decline since 2014 when the Union government removed all incentives for the shipments. India lost its main market China to Vietnam which has duty free access to China while our cotton yarn attracts 3.5 per cent duty. To prevent these exports from declining further the industry needs rebate on state and central taxes and levies (RoSCTL) on an urgent basis.

The price of Indian raw cotton is the highest in the world despite the country being one of the largest producers. The 28 per cent hike in MSP disrupted the prices, leading to disconnect with international prices. To ensure that the industry gets international competitive prices for cotton, CITI recommends the introduction of direct benefit transfer’ to farmers.