For the first time since 2005-06 when India became a major exporter of cotton following a large-scale adoption of Bt-seeds, the fibre has failed to be on the list of the country’s top ten farm export items.

According to the latest official data, exports of raw cotton — including waste —stood at just $308 million in the first half of this fiscal, less than a half of the level seen a year before. Cotton — which was the top farm export item in FY11 and FY12—has steadily lost ground and is now languishing at number 12 in the list of major commodities covering the farm and allied sector.

With domestic cotton prices mostly remaining above the global levels (by 5-10%) in recent months —thanks to an annual 11% drop in output in the last marketing year through September 2016 and a steady offtake by the domestic textile industry — cotton exports are unlikely to cross $700-800 million in the current fiscal, senior trade and industry executives told FE.

Cotton — which was the top farm export item in FY11 and FY12—has steadily lost ground and is now languishing at number 12 in the list of major commodities covering the farm and allied sector.
With domestic cotton prices mostly remaining above the global levels (by 5-10%) in recent months —thanks to an annual 11% drop in output in the last marketing year through September 2016 and a steady offtake by the domestic textile industry — cotton exports are unlikely to cross $700-800 million in the current fiscal, senior trade and industry executives told FE.

Exports are taking a hit due to demonetisation too, with adverse impact of the cash crunch on transportation and other activities.

With demand from top buyer China still subdued and Pakistan turning more protectionist against Indian cotton supplies, exports are unlikely to stage a sharp rebound this year, the sources said. This is despite the fact that India’s cotton output is expected to rise to 35.1 million bales in 2016-17 marketing year, compared with 33.8 million bales in the previous year. One bale equals 170 kg.

Pakistan had put cotton supplies from India through the Wagah and Karachi port on hold from November 23 on grounds of non-compliance of phyto-sanitary conditions before lifting the curbs last week.

In a recent interview to FE, textiles secretary Rashmi Verma had said the government was stepping up focus on domestic value-addition in cotton, which would help create more jobs locally. So, instead of promoting exports of the raw material, the textile ministry’s endeavour would rather be to facilitate greater outbound shipments of cotton-based finished products, Verma had said.

Until recently, China had been the biggest buyer of the Indian cotton, accounting for as high as 70% of the county’s total outbound shipments of cotton. With China gradually shifting from labour-intensive industries like garments and textiles and also trimming its massive inventory, its need for Indian cotton is unlikely to recover anytime soon. This means Indian cotton exporters will now rely more on Bangladesh, which has been ramping up purchases in recent years to meet growing requirement of its garments industry.

According to a November report of the US-based International Cotton Advisory Committee (ICAC), year-ending stocks in China, where much of the excess supplies are held, decreased by 13% to 11.3 million tonnes in 2015-16, as the government there sold over two million tonnes from its official reserves from May through September 2016. China restricted import quota to the volume required by its commitments to the World Trade Organization in 2015 and 2016, and announced that it will continue to do so in 2017. “In addition, the government is planning to begin sales from its reserves in March 2017 when the majority of the new crop will have been sold,” the ICAC said.

By contrast, Bangladesh is among the only three of the top 10 consuming countries where cotton requirement is going to rise, according to the ICAC. The consumption by the textile mills in Bangladesh is forecast to increase 12% to 1.2 million tonnes in 2016-17.

India’s farm exports, covering 43 major segments, stood almost flat at $15,192 million during the April-September period from a year earlier.

Sources :financialexpress.com