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Because Of Rupee Appreciation And GST Cotton Yarn Exports Fall

During April– July 2017, the cotton yarn exports of India fell by 9.79% due to slow shipment are picking up by China and Bangladesh. From India, these countries take about half of the overall cotton shipments.

As per Texprocil, the Cotton Textiles Export Promotion Council, during April-July 2017, in terms of quantity the export figures of Indian cotton yarn were at 283.18kg and in terms of value was $916 million. Since the demonetization of the high-value currency notes in November last year, the local cotton Domestic cotton yarn manufacturers have been reeling under tremendous pressure. As under the unorganized sector, a major chunk of the industry falls and does business primarily in cash.

As there were no taxes on cotton yarn manufacturers before the GST regime started, so the levy of 5% from July 1st also came as a blow to. as the demand is weak in the global and domestic market, so the fall in exports has led to falling in capacity utilization by 60-65% and so the large investments in the sector are at risk. For this down fall, the Indian yarn exporters are mainly blaming slow pick up from China. China is the single largest market for the Indian cotton yarn and buys about 31% of the Indian cotton exports.

In April–July of 2017, the exports to China have fallen by 48.58%. During April-May 2017, the yarn exports picked up after declining by a third to 130 million from 198.5 million kg in the same time of last year. The Chinese importers were more interested importing from Vietnam and this pickup was temporary, said by the industry sources.

On imports to China, Vietnam levies zero taxes whereas Indian imports are levied with 3.5-5% taxes. In Vietnamese textile sector, Chinese mills have invested and are buying yarn from their own mills in the country which is reducing imports from other countries including India. Under Merchandise Exports from India Scheme (MEIS), India needs to provide an incentive to the sector of at least 2% to revive back its losing share in China market.

The exports of the industry have further damaged by the appreciating value of rupee, as per the industry. Between April and July, against the dollar, Indian currency value has increased by more than 1% and reached 64.19. From February 2017, the rupee appreciated over 5% when it reached its recent low level of over 67.02 against the dollar.