The Southern India Mills’ Association Chairman: “The total Indian textiles and allied products export that recorded USD 42.9 billion during 2021-22 dipped to USD 35.4 billion during 2022-23 as a result of declined demand for cotton. The cotton yarn exports, dropped by almost 50% while the cotton fabrics and made-ups exports dropped by 17% and raw cotton exports dropped by 73% during the year 2022-23 when compared to 2021-22.”
Coimbatore May 27, 2023
The global and Indian cotton textile business outperformed during the year 2021-22 owing to pent-up demand created by the post-COVID impact. However, such fortunes proved to be short-lived with abnormal increase in the benchmarked variety of Shankar-6 cotton price to the tune of Rs.1,10,000/- per candy during May 2022. The demand for cotton textiles nosedived from April 2022, due to higher inflation in major importing countries, declining demand, etc., The global export of cotton textiles declined to USD 143.87 billion during the calendar year 2022 as against USD 154 billion and USD 170 billion recorded during the years 2021 and 2020 respectively. All the major cotton textile exporting countries like China, Vietnam, Türkiye and USA recorded lower exports while Pakistan could sustain its export level mainly due to duty free access in key markets. The total Indian textiles and allied products export that recorded USD 42.9 billion during 2021-22 dipped to USD 35.4 billion during 2022-23 as a result of declined demand for cotton. The cotton yarn exports, dropped by almost 50% while the cotton fabrics and made-ups exports dropped by 17% and raw cotton exports dropped by 73% during the year 2022-23 when compared to 2021-22.
In a Press Release issued here today, Mr. Ravi Sam, Chairman, The Southern India Mills’ Association (SIMA) has stated that the cotton arrival during the current cotton season was less than 60% as on 31st March as against the usual arrival of 85% to 90% for the past several decades. He has said that the abnormal month on month kapas price prevailed during the last year made the farmers and kapas traders to hold over 47% of the cotton hoping for abnormal price increase despite Cotton Corporation of India announcing closure of MSP operations on 31st March 2023. He has said that the Kapas price prevailed at around Rs.9,000/- per quintal (100 kgs) during peak arrival months (December to February) of last year despite daily arrival rate of 1.32 to 2.2 lakh bales, the kapas price exceeded Rs.11,000/- per quintal during April 2022. He has added that the daily arrival rate during peak season was lowest during the current cotton season with only around 1 to 1.3 lakh bales.
Mr. Ravi Sam has stated that the global cotton price (Cotlook A index) that prevailed from 118 to 164 cents per pound during the period October 2021 to May 2022 started crashing from October 2022 and has dropped to below 100 cents per pound that has created a panic situation in the cotton value chain. SIMA Chairman has said that the Indian cotton trade was taking advantage of 11% import duty and kept domestic price higher by 8% to 15% which was the root-cause for the substantial drop in cotton textiles and clothing exports from India. He has pointed out that as the production capacity across the cotton textile value chain has dropped to the tune of 30%, the demand for home-grown cotton also dropped resulting in significant drop in cotton prices during the month of May 2023.
The cotton price which was prevailing at Rs.62,000/- per candy on 2nd May 2023, is now ruling at around Rs.56,500/- per candy. The kapas price has also plunged to Rs.7,000/- per quintal as against over Rs.8,200/- per quintal prevailed during December 2022 to February 2023, the peak arrival months. SIMA Chief has stated that the COCPC has projected 337 lakh bales as the crop size for the cotton season 2022-23 and around 272 lakh bales have arrived the market and therefore, the same rate of arrival is anticipated till the end of June. The summer crop grown in States like Tamil Nadu and few other States to the tune of 10 lakh bales might arrive in the later months. He has added that the current market price for Shankar 4/6 seed cotton rules at Rs.7,000/- per quintal, which is higher by 11% compared to MSP price of Rs.6,330/- per quintal.
Mr. Ravi Sam has stated that it would be difficult to gin the cotton during the rainy season and therefore, it is advisable for the farmers to dispose of the available cotton to fetch better prices. He has cautioned that the quality of cotton might also get deteriorated during the rainy season and fetch poor value. He has added that the global cotton season would begin in August and therefore, the cotton price is expected to be stable in the coming months. However, the industry might face shortage of cotton during the end and beginning of the season till the new cotton arrives the market. Therefore, it is advisable to exempt Extra Long Staple (ELS) cotton from 11% import duty and also other cotton during June to October. He has pointed out that the cotton was exempted from the duty from April to October 2022.