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MD Dewani
MUMBAI: The target for exports of cotton yarn from the country in 1999-2000 is fixed at a much lower level of US$ 1450 million, compared with US$1600 million fixed for the earlier year.
It may be interesting to note that the target for 1998-99 was initially fixed at US $1700 million, but when after a few months it was realised that it was too high to materialise, it was slashed to US$1600 million.
Shipments, however, remained difficult and actual exports in 1998-99 could be only of the order of US$1416.52 million compared with US$1574.42 million in 1997-98.
Under this situation it was felt that no useful purpose could be served by fixing the current year's export target at any unrealistically higher level. If the present modest target is just achieved, it would mean an increase in exports of 2.36 per cent over the previous year. If it is exceeded substantially, it can be termed an achievement.
Leading exporters are not happy with the current export performance. They point out that if one looks atshipments in the first four months of the calendar year 1998, they no doubt show an improvement because of the increased offtake by some East Asian countries like Korea, Hong Kong etc, but price realisations remain depressing.
For instance, total shipment during January-April 1999 have been better by 13.09 per cent at 171.33 million kg, against 151.50 million kg in the same period of the earlier year. But aggregate price realisations are 1.28 per cent lower at US $488.66 million against US $495.00 million in the earlier year.
Exporters say that with some recovery in the economy of countries like S Korea etc their intake of yarn has gone up but international competition is so fierce that there is hardly any significant improvement in export prices. According to sources close to an export oriented unit (EOU), they are able to sell 20s yarn around US$ 2.45 to 2.50 per kg, against US $2.38 previously. They fetch about US $2.80 to US $ 2.85 per kg for 30s count against US $2.75 per kg earlier. Neither spinningmills, nor merchant-exporters are happy about this. The union government had some time back included more items under the list of permissible imports under Special Import Licences (SILs) hoping that this might provide some incentive to exporters who can import these items for their own use or for sale. However, there is no shortage of these items at present. Consequently, the premium on SILs is ruling just around 1.50 to 1.60 per cent.
Likewise the transfer of quotas for export to quota-countries fetched a premium last year of about Rs 30 per kg.
This year it could go only up to Rs 8-10 per kg. The main reason is that the demand for cotton yarn in quota countries remains subdued. Exporters explains that the increase in demand for yarn in Korea is partly due to improvement in the domestic demand for textiles in that country in the wake of some recovery in its economy and partly due to a substantial rise in the exports of textiles and apparels to the USA. Likewise, Taiwan has also been able to step up itsexports to the USA. However, reports from European markets remain discouraging.
The demand for yarn in the domestic market is subdued. Many powerloom units are said to be observing three holidays a week as they find it difficult to dispose of their fabrics. The accompanying table gives the trend of cotton yarn production in the country (including that by small spinners) in the last few years.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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