NAEC Seeks To Ban Indian Cotton And Yarn Exports

According to foreign news on August 1, the clothing export cluster (NAEC) of Noida, India, seeks to completely ban the export of cotton and yarn from India, so as to increase the supply of raw materials for the domestic garment industry, so that the ready-made clothes can be exported to the international market and earn more income.

NAEC also said that if cotton yarn exports are banned, the clothing industry, which has been stagnant for six months due to the new crown epidemic, will have more sufficient raw materials to compete in the global export market.

Lalit thucral, chairman of NAEC and Uttar Pradesh Export Promotion Council, said the massive export of cotton and yarn, which suffered huge losses due to the new crown epidemic, was even worse.

It is worth noting that the clothing export share of Noida industrial cluster in the last financial year was 3.5 billion US dollars.

In the past two fiscal years, India exported nearly 12 million bales of cotton and yarn, according to the Ministry of textile.

Data show that in the last fiscal year, India exported about 5.5 million bales of cotton and yarn to Bangladesh, Vietnam and China. 2.197 million bales (about 275 million kg) were exported to China alone.

Although cotton and yarn exports generate about $75 billion a year, exports of ready-made clothing will generate about $40 billion a year if exports are banned and more raw materials are provided to the clothing industry, thukall said.

He went on to say that exports consume the raw material supply of the domestic garment industry, which currently only meets half of the demand of the clothing industry for 12 million bags per year.

"The government has set a target of US $400 billion in merchandise exports, that is, the export of all kinds of ready-made clothes. We can only ask for a ban on the export of cotton and yarn. " He said.

Thukral points out that the textile and clothing industry accounts for 7% of India's total industrial output value and 2% of GDP. The industry also provides jobs for about 105 million people (45 million directly and 60 million indirectly).

"By the way, 72 million of these workers are women, mostly from rural areas," he said. The clothing industry also plays a key role in foreign exchange earnings, bringing in $12.28 billion in foreign exchange earnings in fiscal year 2020 / 21. "

In order to ensure supply, Bangladesh, Vietnam, Thailand and even China will import cotton and cotton yarn from India at the agreed price six months in advance. Indian garment exporters sign a six-month agreement with the importing countries, and the price will be implemented in accordance with the provisions of the agreement in case of any disaster or loss, thucral said.

"It's because we don't have free trade agreements (FTA) or preferential trade agreements (PTA) with European countries, which protect us from price fluctuations," he said

"The garment industry here depends on cotton, silk and wool," says neeraj Prakash, another exporter. Nearly 75% of clothing material is cotton, which directly supports local cotton farmers. However, the industry is facing a serious shortage of cotton yarn, affecting production, employment and export. In addition, cotton prices have risen sharply in the past six months, ranging from 30% to 60%, which also leads to higher production costs and makes it more difficult for the industry to compete globally. "

"India exported about 50% of its cotton and yarn to China in the last fiscal year," said a joint Secretary level official at the Ministry of textile, who declined to be named

"Our department has set a target of $400 billion in merchandise exports for the 2021 / 22 fiscal year," he said. We will soon ban the export of cotton and yarn because it will not only affect employment (more raw materials will provide direct / indirect employment for at least 9 million people), but also hinder the growth of garment manufacturers and exporters. "