Cotton export ban cripples specialised yarn makers

COIMBATORE: Salem-based Thambbi Modern Spinning Mills is a regular supplier of colour and organic yarn to Nike, the US-based sportswear and equipment supplier. The Indian company, which has its own R&D unit, has got orders for supplying 30 different shades of specialty yarn for Nike’s innerwear brands that would be released in 2011.

Under the new export quota rules, the government has not made any distinction between different counts of yarns. As a result, in the scramble for quota, specialised yarn makers like Thambbi Modern Spinning Mills have lost out or have registered very little volume. Worse, there are few takers for their special yarn in the local market.

The stoppage of cotton yarn exports is expected to hit 100% export-oriented units and also those companies that have export obligations under the Export Promotion Capital Goods (EPCG) scheme.

According to the data available with the office of textile commissioner, Mumbai, nearly 30 companies alone have booked for two-thirds of the exports while around 300 mills share the rest of the quantity that need to be shipped in exactly a month.

“The system is not foolproof and we request the government to investigate on speculative elements as the companies that have registered in bulk quantities might not be able to export on time. So it will only lead to speculation,” said VS Velayutham, former chairman of the Cotton Textile Export Promotion Council and chairman of Tirunelveli-based Gomathi Mills.

Tirupur Exporters’ Association president and Poppys group chairman A Sakthivel, who demanded a ban on cotton and cotton yarn exports to save the garment industry, said the government might assess the situation and take a call on allowing export of the non-shipped quantities. “As far as the domestic consumers are concerned, small mills have already started reducing prices. Even bigger mills are negotiating on large volumes.

So, we expect prices of cotton and subsequently cotton yarn to come down further from tomorrow, the day when government closes the shipment of cotton exports,” he added. Rajendra J Hinduja, managing director of Rs 1,072-crore Bangalore-based Gokaldas Exports, said that the unexpected rains have delayed cotton arrivals and so the Centre might keep the export ban intact so that domestic market is not starved.