India’s cotton exports set for revival over global demand for masks, lower domestic prices

Indian Cotton Association's estimates say exports are now expected to touch 65 lakh bales this year against its June estimate of 40 lakh bales — a 63% improvement.

Cotton balls grow on a plant | Prashanth Vishwanatha | Bloomberg

New Delhi: After witnessing a major slump in the lockdown period due to procurement issues, India’s cotton exports seem set to revive.

According to Indian Cotton Association’s estimates, cotton exports are now expected to touch 65 lakh bales this year against its June estimate of 40 lakh bales — a 63 per cent improvement. Last year, India exported 50 lakh bales of cotton, showed data from Cotton Corporation of India (CCI).

This growth is expected in the backdrop of strong global demand for mask and surgical gown production along with lower domestic prices, which have made foreign sales economically viable.

Moreover, the government nodal agency for cotton disbursal, CCI, has sold around 32 lakh bales of cotton from its reserves procured in the domestic market in the lockdown period. One bale is equal to 170 kg.

With export and domestic consumption sluggish due to the Covid lockdown, the CCI had to do major weightlifting in procurement across the country, which left it with excessive reserves in stock and storage issues amid monsoon rains.

“The cotton harvest season in the country is almost over but the supplies in the domestic market are less as big farmers, traders and millers are hoarding stock to sell it later for an increase in prices,” an official from the Ministry of Textiles, which supervises CCI, told ThePrint.

“We have decided to offload stock to serve twin purposes of providing smooth supply to an increase in demand from the medical textiles sector which is making surgical gowns, masks as well as supporting prices for farmers. Also, the increase in offload at bulk purchase will further drive down domestic prices which will boost export,” added the official.

The agency’s reserve sale price for cotton bales is normally around Rs 37,100 candy (1 candy equals 355 kg) which has been reduced to Rs 30,000/candy to offload the stock. The CCI is also working on offering major discounts for bulk purchases.

‘Cheapest in the world’

Mahesh Sharda, president, Indian Cotton Association, said, “Indian cotton has become the cheapest in the world as the slow domestic production has driven down the prices. Demand from major importing destinations like Bangladesh, China and Vietnam has improved which will further push the export.”

He added, “Indian cotton is being offered at 60-65 cents/pound which is around 8-10 cents cheaper than the closest competition crop from the US. Also, the availability of premium quality cotton at a discount from domestic sellers due to low domestic consumption in the garment and medicinal textile sector will further push the export to an overall high of 65 lakh bales.”

Sluggish domestic consumption and decline in procurement have pushed down the cotton prices in India which has appeared as a blessing in disguise for the export prospects.

It was earlier reported that farmers in Maharashtra’s cotton zone, Vidarbha, were struggling to sell their harvest after they had to resort to distress sale as unseasonal rains were affecting the quality of produce.

Almost one-fourth of Maharashtra’s total cotton produce, worth Rs 5,500 crore, remained unsold until the end of April, which is the usual procurement season of the crop.