Earnings increase as export receipts of yarn go up
The rupee’s continuing downslide against the dollar has brought cheer to cotton growers and spinning mills in Punjab. As the yarn and textile mills are now fetching higher value in rupee terms with their exports, the gain to the textile industry is further travelling to the cotton growers.
After a long discouraging trend in cotton prices, this soft white fibrous substance has witnessed a sharp rise in recent times. Lint cotton is attracting Rs 5,100-Rs 5,200 per maund (37.324 kg) these days against Rs 4,300 per maund that it fetched last year during the corresponding period.
“While the Indian economy is passing through a difficult phase with business activities on the lower side due to depreciation in the value of rupees, the textile and yarn industry exports have surged mainly due to a sharp increase in the value of dollar against the rupee,” said Kunal Thukral, the proprietor of UB Steel Ltd in Mumbai, a leading yarn and textile exporter in the country.
In yarn export if earlier, a dollar was bringing Rs 55-Rs 56 to the millers, with the depreciating value of rupee, one dollar now fetches them Rs 68-Rs 69.
With the local currency depreciating against the US greenback, it makes yarn exports cheaper from India in comparison to Pakistan, said IJ Dhuria, Director, Material, Vardhman Group of Textile Industry.
With the value of rupee plunging, there was an increase in the volume of textile and yarn exports in recent times. So, the prices also continue to soar in the domestic cotton market due to the high demand of the raw material, said Dhuria.
“How much the cotton and yarn industry stands to gain from the sliding rupee depends on the reserve stock of the millers but it will continue to keep the cotton prices high in the coming days,” said Kunal Thukral.
“With the value of the rupee plunging, the market condition for the man-made India fibre (cotton) will continue to show signs of improvement in the international market and we are hopeful that the demand will pick up in the months to come. With the demand going up in the domestic and international market, we are hopeful that cotton growers will yield profit this season,” said Dhuria.
Besides the weak rupee jacking up textile exports, there is another reason to elevate the cotton prices, said IJ Dhuria. “India has a poor opening stock of cotton this year. By the end of September, India would have an opening stock of cotton of only 16 lakh bales. With increased volume of yarn export and high demand of cotton from the spinning mills, the cotton prices will surge further,” he said.