The ongoing trade war between India and China has cast a shadow on the burgeoning textile sector of the country, with exporters worried about their stuck payment.
As India stares at bumper cotton stocks, exporters are asking for urgent steps like exporting subsidies to help them offload their stocks. With the stoppage of imports from Bangladesh at the land ports between two countries in West Bengal coming to a halt, Indian exporters fear this would affect their prospects to one of the biggest markets of Indian cotton.
At present, Indian cotton is perhaps the cheapest in the world, with bales (170 kg of ginned and pressed cotton) priced at Rs 32,000 each.
Prior to the lockdown, Indian exporters were eyeing Chinese markets to sell their stock as the former was in the process of replenishing its stock.
The Cotton Association of India (CAI) has estimated that India will export around 47 lakh bales for cotton marketing year (November-October) 2019-20. China imports bales and yarn from Indian for its home grown textile industry.
Exporters, while speaking to The Indian Express, said they fear their credit line with Chinese companies will be hit for the bales they have exported between April and June.
Estimates say around 2 – 3 lakh bales have gone to China during this period, payment for which is yet to be released. Exporters avail credit from banks to export their produce and adjust the same once their received payment for shipment. “We will be in big trouble if the payment is held up,” said a Mumbai-based exporter. As Indian companies start boycotting the Chinese market, textile manufacturers and cotton ginners feel they will have to do the same.
The bigger worry for cotton ginners is the large unsold export surplus the country will carry forward for the next marketing season. Trade with Bangladesh, one of the biggest importers of Indian cotton, has come under a cloud, given the uncertainty at the land border. On Thursday, the Federation of Indian Export Organisation dashed off a letter to Mamata Banerjee, the Chief Minister of West Bengal, highlighting the problems they are facing over exports.
While exports from India have been allowed to go to Bangladesh, imports have been stopped at land borders in West Bengal.
“This has affected Indian MSMEs who depend on Bangladesh for most of their raw material,” the letter said. Bangladesh, in retaliation, has also stopped the entry of Indian goods through its land border.
Pradeep Jain, founder president, Khandesh Cotton Gin/Press Owners and Traders Development Association, called for an immediate resolution on the present imbroglio between the two countries. “Bangladesh alone imports 17-18 lakh bales from India and we should retain the market,” he said.
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