Yarn exports from India decreased around 20 per cent year-on-year in the first quarter ended June, on the back of falling demand from China. However, spinners believe that it's a temporary issue and the shipment will improve September onwards. Lifting of stock-piling policy by the Chinese government coupled with high production and labour costs are becoming a burden for the industry. The country has also reduced their fabric production due to which yarn imports have gone down too. Yarn shipment from the country slipped to about 100 million kg in April and, according to industry estimate, further to 90 million kg each in May and June, after clocking average monthly exports of about 120 million kg in 2013-14, which was 33 percent more than the previous year.
Indian yarn exporters are facing problems in Europe, too, with Pakistan diverting its exports to EU, taking advantage of the 9.65 per cent additional benefit under generalised system of preferences (GSP) Plus agreement. But with industry hopeful of getting orders from China as well as domestic industry keeping the festive season ahead in mind, players are looking for better days ahead.
On the other hand, China has introduced a new cotton policy from April 1, under which, the government reset cotton auction bids at 17,250 yuan (over Rs 1,70,000) per ton, down 4.2 per cent from its floor price of 18,000 Yuan (over Rs 1,77,000) per ton. Indian spinners are finding it difficult to export yarn at a lower price-level offered by China. For mills in Tamil Nadu, which produce 50 per cent of the country's total yarn, the landed cost of good quality cotton ranges between Rs 45,000 to Rs 46,000 per candy of 355 kg.