Textile spinning mills in India have started importing cotton as prices of the commodity are ruling higher in the local market compared to the international market. Mills have started buying West African cotton as costs are lower. Two leading textile mills in south India have bought about two lakh bales each of West African cotton in the past two or three months.
With imported cotton, mills get better credit facilities and lower interest rates. Yarn productivity is also good with imported cotton. The cost of imported cotton is lower by at least Rs 2,000 per candy. Moreover the quality is also better. Many spinning mills, including smaller ones with a capacity of 10,000 spindles, are importing cotton now.
While local cotton prices have surged by 12.9 per cent between April and mid-June, they have increased by only six per cent in the international market. Textile mills in the country consume around 25 lakh bales of cotton per month. Mills in the south alone use about 10 lakh bales a month. With the area under the crop declining on the back of a drought in Maharashtra and Karnataka, and pest attacks affecting output in Gujarat, Punjab and Haryana, cotton production is expected to fall to a five-year low of 352 lakh bales for the 2015-16 season.