Many mills are raising headcounts. A good monsoon and a better crop size may help keep the price of cotton viable for the sector in the next few months. According to a study by Credit Analysis and Research Limited, direct yarn exports are likely to touch 1,500 million kg by FY14 from 1,107 million kg in FY13. Major demand would come from China, it said.
According to S P Oswal, chairman of Vardhman Textiles, “Indian mills are making merry as production of cotton yarn in China has slowed. The cotton available to Chinese yarn makers is costlier by 10 per cent. Even after paying an duty on the consignment from India, they save five per cent of cost, and that is substantial.” He added Indian spinners could make hay till the Chinese government intervened.
Withdrawal of the Focus Product Incentive Scheme by the Indian government, according to Oswal, did not make a dent on export earnings as realisations had increased since last year. The secretary-general of the Confederation of Indian Textile Industry, D K Nair, is slightly apprehensive about the price of cotton. There has been an upward trend in the past few weeks and if it continues it may mar the prospects of lucrative returns for millers, he said.
The sector is optimistic over revival of exports but expects the Focus Product Incentive Scheme to be revived, too, he added.
The President of All Gujarat Millers’ Asociation, Dilip Bhai Patel said fears of prices moving higher may subside soon as at higher price there will be attraction to import cotton and as arrivals pick up prices sould correct.