By Nayan Dave
For the first time in the history of the country’s textile industry, India is witnessing import of cotton yarn to ensure seamless supply of the important raw-material to weavers and textile mills. The imported cotton yarn is nearly Rs 30 (per kg) cheaper than the yarn being sold by local spinners.
Speaking to FE, Atul Ganatra, president, Cotton Association of India, claimed, “Although India has imported cotton many times in the past, this is the first time that cotton yarn traders and brokers have decided to import cotton yarn. This is unprecedented.”
“Nearly 200 containers (4,000 tonnes) of 40 counts of combed-carded compact cotton yarn have arrived at Indian ports from Vietnam, Indonesia and Taiwan,” Ganatra said.
Not only that, some of the weavers and textile mills in the country have purchased imported cotton yarn from traders in smaller quantities for testing purposes and if they finnd it suitable they are likely to give bigger orders for the imported cotton yarn.
After China, India has the world’s second largest spinning capacity. The nation is producing 4.7 mt of spun yarn of which 3.4 mt is cotton yarn. According to the CAI president, weavers and textile mills consume nearly 60 to 65% of the total cotton yarn being produced in domestic spinning mills and the rest is exported.
“Considering the huge installed capacity of spinning units in the country, Indian weavers never had to import cotton yarn in the past. However, for the first time they are forced to buy imported cotton yarn this year as it is nearly Rs 30 (per kg) cheaper than the yarn being sold by the local spinners,” he said. Unlike cotton, the Government of India (GoI) has not removed import duty on cotton yarn. However, there is no import duty on cotton yarn being imported from Vietnam and hence importers are taking advantage of this.
Prices of cotton in the domestic market are much higher than international prices and hence production cost of spinning units in India remains high, said Jayesh Patel, executive committee member of Confederation of Indian Textile Industry (CITI). Patel claimed that the spinning industry in India is currently operating at half of its installed capacity due to lower demand. In the wake of import of cotton yarn, spinning units across the country will have more challenges to sell their end products, he added.
Bigger companies like Welspun have already started importing cotton. “We have a huge installed capacity to make cotton yarn and hence the Welspun group is importing cotton from Egypt. Despite imports of cotton, we are able to make cheaper yarns for our weaving units,” said Chintan Thaker, president, Welspun Group.
Similarly, Ahmedabad-based Chiripal Group company Nandan Terry has decided to import 100 mt of cotton from Nigeria. Ronak Chiripal, CEO of the company, said, “Rising cotton prices have increased the volatility in the business projections with respect to profits as margins have come under pressure. We had anticipated this possibility and taken precautionary measures like cotton hedging. We have not cut down on production and are operating at full capacity.
”Except bigger spinning units which have purchased cotton at relatively lower cost, most of the spinning units are struggling to continue operations,” said Gautam Dhamsania, owner of Rajkot-based Narmada Spinning, adding, “There is a dearth of quality cotton in the domestic market. Most of the spinners will have to wait till fresh arrival of cotton from October this year.” Cotton stock of textile mills is exhausting fast and hence there would be further import of cotton yarn for next 3-4 months which could take the tally of imported cotton yarn up to nearly 1,000 containers. Simultaneously, composite textile units like Welspun would continue importing raw cotton till the fresh arrival of cotton in the domestic market.