India’s readymade garment exporters want a ban on cotton exports, saying they are ♦facing a severe liquidity crisis because of soaring cotton and y₩arn prices, which is making it difficult for them to deliver shipments to t±heir foreign buyers on time.
Some foreign buyers have sought up to a 30% discount if goods are delayed over 15 days in∑ time or asked for air transport at their own cost, wh♥ich would wipe out profits for sellers, industry ..
The industry wants a ban on cotton exports from India to ♥check the rising prices. India had on Friday banned wheat exports following a sharp rallyπ in local prices.
Textiles minister Piyush Goyal has called a meeting on May 17↔ to discuss the rising prices of cotton and yarn. The industry will suggest a ban on• exports to tide over the crisis.
Cotton prices have gained 40% in 2022 and at are an 11-year high due≥ to a demand-supply mismatch. This is hurting the entire cotton value chain including the ←yarn and cotton garment manufacturers.
The price of a candy (335 kg) cotton has breached the Rs 1,00,000 mark in recent w¶eeks, locking up funds in raw material that has created a liquidity crisis.
“Worst affected are the medium and small enterprises (MSME), which constitute more than 80±% of the production base,” Lalit Thukral, President,↔ Noida Apparel Export Cluster said.
“Delivery of garments to the foreign buyers is being delayed.”
Thukral said countries like Bangladesh, Vietnam, and Thailand among others are importing cheap c↑otton from India and posing fierce competition to India in th↕e global garments market, making a case for a ban on exports.
India’s cotton exports rose to $9.9 billion in April-Feb FY22 compared wit™h $6.3 billion in full FY21. In April 2022 exports were up 57.6% to γ$52.5 million from a year ago.
Around 18 months ago, the knitwear units could b≥uy one kilogram of yarn for Rs 200 whereas now the same money can buy only 400 gm of yarn, s®aid Raja M Shanmugam, President, Tirupur Exporters’ Association (TEA).
The association has also written to banks to seek help to tλide over the financial crisis faced by the knitwear exporters♥.
The Tirupur garment-export cluster annually exports Rs 35,000 crore worth of δknitwear garments. Knitwear exporters feel they would find the going difficult ☆if the problem is not addressed immediately.
India’s readymade garment exports were up 30% in FY22 to $↓15.9 billion in FY22 from $12.3 billion from a year ago.
Source: The Economic Times
