Why textile and garment industries want ban on cotton exports?

Prices have been rallying since November, when they crossed Rs 8,000 per quintal before scaling the Rs 10,000 mark for the first ever time in many markets by early-January. 

They have nearly doubled compared to last year. The average modal or most-quoted price of kapas (raw un-ginned cotton) at Rajkot APMC (Agricultural Produce Market Committee) mandi was Rs 12,250 per quintal on Thursday, as against around Rs 6,300 this time last year. This was also way above the government’s minimum support price of Rs 6,025 per quintal for long-staple cotton varieties.

Basically three reasons. The first is lower production. In 2020-21, India’s total cotton lint fibre output was 353 lakh bales (lb) of 170 kg each. For the current year, the Cotton Association of India (CAI), a Mumbai-based trade body, has estimated production at 323.63 lb. This figure, released on May 14, is lower than its previous estimates of 335.13 lb (made on April 9), 343.13 lb (February 25), 348.13 lb (January 18) and 360.13 lb (October 30).

The second reason is international prices. The Cotlook ‘A’ Index price – an average of representative quotes in the Far East destination markets – is currently ruling at 167 cents per pound, up from 92 cents a year ago. India is the world’s second largest cotton producer (after China) and third largest exporter (after the US and Brazil). High global prices have made exports attractive. Also, they have pushed up domestic prices closer to export parity levels, while simultaneously making imports more expensive.

The third reason is consumption. The state-owned Cotton Corporation of India (CCI), in March, projected total domestic consumption for 2021-22 at 345 lb, compared to 334.87 lb, 269.19 lb and 311.21 lb in the preceding three marketing years. “Demand has significantly increased, as mills and other users were operating at sub-optimal levels in the past few years. Even during the pandemic, demand for bed-sheets and towels had zoomed, translating into higher consumption of cotton and yarn,” said S K Panigrahi, chief general manager (marketing) of CCI.

. Lint, the white fibre that mills spin into yarn, constitutes only about 34% of kapas. The balance is seed (65%) and moisture. The seed further yields both oil (used for cooking) and de-oiled cake (used as a protein ingredient by livestock feed manufacturers).

Source : the Indian Express, economics times.