The government proposals to control the export of cotton and yarn by suspending the 7.67% DEPB benefit available for cotton yarn exports, by imposing a prohibitive duty on the export of raw cotton and yarn, and by introducing a mechanism to register cotton yarn exporters, has enthused the Tirupur knitwear manufacturers but sent shock waves among spinners and cotton farmers.
The decision to impose these price control measures were taken at a meeting chaired by finance minister Pranab Mukherjee, agriculture minister Sharad Pawar, commerce minister Anand Sharma and textile minister, Dayanidhi Maran on April 6 in Delhi.
A Sakthivel, president of Tirupur Exporters? Association (TEA) said he has sent letters to the Union ministers and senior government officials of the concerned departments thanking them for the announcements.
He hopes that the yarn prices would come down and save the knitwear garment sector and protect employment.
However, J Thulasidharan, chairman of the Southern India Mills? Association (SIMA), said global competitiveness of the spinning industry, which is just recovering from an unprecedented crisis, would be stemmed at the bud itself by the present government moves.
Levying export duty on cotton will punish the farmers and send wrong signals ahead of sowing season. ?The proposed levy of prohibitive duty on raw cotton and yarn export is yet another lopsided policy announced by the government in the recent past,? he said.
Thulasidharan said there was a shortage of cotton yarns and fabrics, the world over and added that the ideal policy would have been allowing the spinning and cotton farming to remain profitable and help creating the necessary capacities to remove supply side constraints that is set to grow with the inclusive policy and rapid growth.
The inefficient and globally non-competitive knitted garmenting sector in Tamil Nadu has had more than its share of additional problems, he said.