According to industry sources, few big mills contracted for import of 27.5 mm short staple cotton immediately after the notification. According to market estimates, import deals were finalised at around ₹89,000 per candy of 356 kg each (FOB). Generally, Indian textile industry consumes 28.5 mm medium staple cotton for mostly textile products. Short staple cotton can be used after blending with medium staple cotton.
Chetan Bhojani, a cotton trader from Gujarat, told Fibre2Fashion that cotton import is not viable duty higher prices in international markets. However, mills had imported American cotton just to ensure supply in the coming months. “There is no relief for the industry by the removal of import duty of around 11 per cent because cotton is expensive in international markets.”
Earlier, industry representatives had said that removal of duty in mid-April was a good but delayed decision. Cotton prices would not have shot up to ₹98,000 per candy if duty would have been removed in February. The industry had earlier estimated that there would be import of 40 lakh bales if the duty was removed in February, which could have filled up the shortfall in the domestic market. But now the industry expects the imports to be mere 10-12 lakh bales by September this year.
According to market sources, almost three lakh bales of primarily Pima cotton of the US was imported immediately after the removal of duty. This cotton is expected to reach in two-three months. Therefore, duty free cotton may hit Indian ports by mid-June. Market sources said that very few deals for cotton imports are being finalised due to high prices abroad. Mills are importing cotton in very urgent need just to ensure supply. Weaker demand from weaving and garment industries do not allow spinning mills to increase yarn prices which restricts mills to import expensive cotton.
Fibre2Fashion News Desk (KUL)