Indian textile firms look overseas for cotton

by Dave

Business Standard

India has also begun importing [cotton] from Argentina, Brazil and the US on account of lower prices. As compared to domestic rates, the imported cotton offers a benefit of Rs 2,000 per bale to these textile companies.

Thanks to a 40 per cent rise in minimum support prices (MSP) for cotton, the domestic prices seem far fetched compared to international prices, thereby tempting textile firms to import rather than source from domestic market. For instance, Ahmedabad-based Aarvee Denim & Exports Ltd. recently imported around 15,000 to 20,000 bales of cotton from Latin America. “The international prices have been so attractive that in our recent import we earned a profit of Rs 2,000 per bale. Apart from high MSP, the recent cut in import duty has worked in our favour,” said Ashish Shah, managing director of the denim major.

Shah added that countries like Argentina and Brazil have been offering cotton at some attractive prices and luring cotton importers across the world.

According to Abhinava Shukla, general secretary of Ahmedabad Textile Mills Association (ATMA), the recent suggestion by textile ministry for farmers to hoard cotton and not jump immediately into sales has also resulted in lower supply of cotton. “With the farmers now hoarding cotton in expectation of better prices, the textile firms seem to have been prompted to import cotton. The benefit from importing cotton rather than buying from domestic market is, however, shortlived since cotton prices may settle down in India soon,” said Shukla.

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