With the recent initiative taken by government to scrap the 14% import duty, the country may import about 5 lakh bales of raw cotton by end of the current season of 2007-08. Fresh imports parcels are expected to hit Indian ports in the next three months as there is a shortage of high-quality cotton in the country.
The new season may be delayed by a month due to deficient rains in cotton-growing states and fresh arrivals of new cotton crop may resume in the northern regions only in early-October. ?Cotton traders in the country have so far contracted import deals of about 1.25-1.50 lakh bales for prices ranging between 58 and 82 US cents per pound, depending on varieties. Major imports by Indian traders are of short- and medium-staple mainly from Tanzania, West Africa and Uzbekistan,? a local trader said.
There are also rumours that importers have booked about 10,000 bales from Pakistan at 75 cents for immediate delivery. Despite market reports of fresh import deals, prices of major cotton varieties such as Shankar-6(S-6) and Kalyan are still ruling at higher price-levels. Shankar-6 prices are ruling around Rs 27,700- Rs 28,300 per candy while Kalyan prices in Gujarat hover around Rs 22,000-Rs 22,500 per candy. The current domestic prices are at a significant discount to the landed cost as international prices are ruling higher, sources said.
The recent government initiative to scrap the import duty on raw cotton and withdraw the 1% export incentive is unlikely to cause a fall in prices, according to Crisil Research. This is because a significant portion of India?s cotton consumption is of the short- to medium-staple variety, a segment in which the country is self-sufficient, cost-competitive and has an exportable surplus, report said. India has so far imported about 6.50 lakh bales in the beginning of the current season.