India’s cotton yarn exports fell 35 per cent in the first quarter compared to the same period last fiscal. In April 2019, the fall was 21 per cent compared to the same month previous year. May saw a decline of 31 per cent against May 2018 and June saw a whopping decline of 50 per cent compared to June the previous year.

India’s exports of cotton yarn have been declining since 2014 when incentives for shipments were removed. India lost its main market, China, to Vietnam, which has duty free access to China while Indian cotton yarn attracts 3.5 per cent duty. To make things worse, Indian raw cotton price is the highest in the world despite the country being one of the largest producers. The 28 per cent hike in minimum support prices disrupted prices, leading to a disconnect with international prices.

Direct benefit transfer to farmers can ensure that industry gets international competitive prices for cotton fiber. A rebate on state and central taxes and levies on an urgent basis can save the only textile segment where India is a leader. The rebate has been extended to made-ups and apparel but not to the yarn and fabric segments.