An appeal for reconsidering the withdrawal of duty drawback on exports of cotton yarn has been submitted by textile mills to the Union Government. A notification has been issued by the government in this regard on 29th April 2010.
V.S Velayutham, Chairman, Cotton Textiles Export Promotion Council explained in a release that withdrawal of duty drawback was basically a timely tested scheme initiated for reimbursing the incidence of excise and customs duties levied at the product’s input stages.

Agreement of WTO on countervailing measures and subsidies permitted remission or exemption of prior stage cumulative indirect import charges and taxes levied over inputs which are used for the development of export products

Mr. Velayutham told that the government had already handled a blow to trade of exports and had also moved against their own principle of goods exporting without taxes.

J. Thulasidharan, Chairman of Southern India Mills Association explained that duty drawback was actually not an incentive.

It was simply a duties refund and was levied on most export commodities. Prices of yarn were determined by market experts depending upon demand and supply and any kind of moves made for getting artificial control over the intermediary products definitely would bring an effect on the functioning of the whole textile value chain.

Nigeria: Comments given by Senator Jubril Kuye, Commerce and Industry Minister were condemned by the producers of textile, explaining that any kind of financial support is not really required by the Federal Government.

Producers were disturbed with the comments given by Kuye explaining that government shouldn’t really rush to disburse textile revival funds. Stating on behalf of NTMA, Nigerian Textile Manufacturers Association, producers said that revival of the sector was needed for which disbursal of textile sector revival funds was important. This was also confirmed by stakeholders and experts of the industry. More than 30% of the problematic situations faced by the textile sector are mainly because of the lacking in finances.

On his way to a trip abroad, Kuye had explained that, With years of experience with me, I can see where the problem actually lies. Therefore my suggestion is that revival packages should not be paid out by the government.

He had also informed that, It should be more than just giving out finances to the textile industry, alongside with it, it’s necessary to make sure that abundant quantity of cotton in grown and the mills are given regular cotton supply

New Delhi: Duty amount of Rs. 2,500 per tonne has been imposed on exports of raw cotton by the government in order to standardize the commodity prices in the domestic market and in turn help the domestic industry of textile.

Central excise and customs board has expressed about the export duty levied on natural fibers, which saw a great raise in prices during the recent few months. A textile ministry official said that the export duty has been fixed for some 6 months duration.

Textile exports being hit by highly appreciated rupee and soaring raw cotton exports in FY11, although there might be limited impact with the effect of recovery in competitive pricing and global demands, said the industry players.

Increasing prices of raw material and a firm rupee are a big concern…but we are hoping as long as the prices remain higher along with the international demands out exports will keep growing, explained D.K. Nair, secretary general at CITI, Confederation of Indian Textile Industry.

Rupee has increased up to 4.6% as against US dollar till now in 2010. Export realizations for textile and apparel exporters get reduced with stronger rupee.

A strong movement in exports of cotton is getting scarcity in domestic supplies, pushing up commodity prices which are the important input for apparel and textile makers.

Cotton exports of India 2009/10 are likely to increase up to 129%, 8 million bales on year, forced by active demand from Bangladesh and China, said a senior official from government department in the statement given last week.

During 2008/09, 3.5million bakes has been exported by the country and initially too 5.5million bales exports have been estimated by the government for the year but slightly less production in China, majority consumer, has supported exports.

Chinese exports have been much better…approx 56% of the total exports or 3.08million bales so far, said Mr. A.B. Joshi, the chairman of CAB, Cotton Advisory Board, body of growers of cotton, government, traders, ginners and industry associates

During the same period, International prices for cotton have been raised by 67% approximately still keeping the textile industry competitive, but attractive pricing need to done for the exports of end products.

Impressive rise of rupee against Euro during 2010 could result in eating away the profits of many textile mills and also reduce the dwindling trade of India with EU, European Union.

There has been an 11% rise in the rupee against the Euro during 2010, among the rising assumptions that there could be a failure by Greece to pay its sovereign debt. Quote for rupee against Euro was at 66.61 in December 2009, was 59.26 at the end on April 9, 2010.

Partly convertible, Rupee was at 44.28/39 per dollar, after a peak of 44.23, best since 8 September 2008, and .4% stronger than 8 April 2010, Thursday, closing at 44.46/47.

Regardless of the country, all the transactions occur in US dollars. This basically affects the Euros and lead to a drop in it in comparison to dollar in 2010 by 6.6%. Textile industry would be affected by this but with a nominal impact only.

However, the impact could be bad or good for big textile companies, as per the total exports of textile industry of India; only 10-15percent is the European overseas sales, although payments are handled in US dollars only. Heat could be felt by smaller companies as they don’t really have any access to the derivatives of the foreign currency.

Realizing that spinning sector hit the recent cotton yarn crises badly, textile mills insisted the center, most importantly the Union Textiles Ministry, for allowing expansion to the industry and meeting the raised demands for both levels, domestic and global.

While moderating the cotton process and welcoming the process of containing exports of cotton yarn, owners of the mills are urging Mr. Dayanidhi Maran, Minister of Textile for taking more actions to ease and support the ‘supply side’ and make sure that capacity of the mills should be expanded and the production levels too should be raised.

Textile Industry captains feel that the industry was majorly hit by discounts offered to the export of cotton yarn and its ‘unfettered export’ than the global slowdown, the spinning mills especially. Competitive countries like Bangladesh got benefited from the affecting crises that lead to shrink of the Indian textile industry. It was only during later 2009, that the situation got corrected by Mr. Maran’s intervention.

When TUF, Technology Up-gradation Fund was cleared and some Rs. 2,000crore backlog was reimbursed, many textile mills retained their working capital and began to expand capacity gradually.