When we export cotton we are exporting textile jobs

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: India is the second largest producer, consumer and exporter of cotton in the world. It is also one of the largest producers and exporters of down stream cotton textile products. There is an acute shortage of cotton in the world markets this year, whereas India harvested a bumper crop. In spite of a 10% increase over last year’s production, which itself was an all time high record until then, cotton prices in the country increased by over 35% year-on-year, because exports also registered an all time high record of nearly100 lakh bales as against 58 lakh bales last year. We export more than half of our total production of cotton textiles and with a demand recession in international markets, our textile exporters are not able to pass on the increase in cotton prices to the buyers.

Viewed from this overall perceptive, the choice is between uncontrolled exports of cotton and competitive exports of textile products. The textile industry, which is just recovering from the rupee appreciation problem, cannot absorb the present level of price escalation in cotton and continue to export. So, the question boils down to whether we should do maximum value addition to our cotton within our own down stream industry and generate wealth and employment within the country or export one third of our crop to China and Pakistan, which are the toughest competitors for our cotton textile products in the international markets.

Ironically, China is the largest exporter of textile products to India and Pakistan is among the largest, especially in home textiles. When we export cotton to them, we are exporting textile jobs and when we import textiles from them, we are importing unemployment.

The interest of farmers is another perspective from which this issue should be viewed. To what extent do they benefit from uncontrolled cotton exports? It is common knowledge that farmers do not export cotton. Our cotton crop starts arriving in the market by October and most of it is sold by farmers by February-March. A careful examination of the price trends of cotton will show that most of the increase in prices occurs every year after March, when the cotton is already in the hands of ginners and traders. Thus, farmers get only a limited share from the increased cotton prices.