Cotton exports from India have come to a standstill as prices of the commodity here are higher than abroad. Indian exporters have now come under huge financial stress. India is the second largest exporter of cotton after the US. In the past three months, international prices of cotton have fallen 25 per cent. As a result, Chinese importers can secure cotton of better quality and at a lower price from other countries. Demand for Indian cotton has also fallen because China has asked its mills to import only 20 per cent of their requirements.
Demand from Chinese mills has shifted in favor of the long-staple, finer quality from Brazil. As of now, the unsold cotton already sent to China by Indian exporters is lying at warehouses in Chinese ports. Initially, Indian exporters had thought owing to El Nino the cotton crop might be hit and, therefore, prices might rise. However, that hasn’t happened. And most exporters aren’t in a position to pay ginners for the cotton bought from them. It’s estimated the losses to ginners and exporters may run to several hundred crores of rupees.
Several Vietnam and Bangladesh mills have bought Indian cotton to convert it into yarn and export to China. However, as yarn imports by China have fallen, these countries will also cut Indian cotton imports.