Decline in exports: India competes with neighbors

Business International Karnataka

India’s cotton exports saw a 61 percent decline in September 2022, report shows.

Cotton exports in India have been declining since the last few months of 2022 and have gone down by 61 percent. Study by The Observatory of Economic Complexity (OEC) shows that decreasing global demand and less production have contributed to this decline., India accounts for 13 percent of the global cotton trade Over 1.04 million tons of cotton was exported in September 2022, in comparison to 2.04 million tons produced in the same month a year before. Therefore, changes in Indian cotton exports have significantly impacted the market.

The OEC says that India has been a leading producer and exporter of cotton, but the production had been declining due to factors like pest infestations and drought. Moreover, exports of cotton fell by 64 percent in Bangladesh, India’s largest export market. Exports to Egypt have also decreased by 47 percent.

Cotton and Indian Merchants

Mohammad M., owner of a cotton waste recycler shop in Kalasipalyam said that declining cotton export has also affected his business for a year now. “There has been an increase in the prices of raw materials last year. It has impacted small businesses like ours. We collect the left over clothes from cloth manufacturing factories and make rugs, door mats and wipers,” he added. .  He used to pay Rs. 82 per bundle for cut-outs earlier, but in the last six months  the prices have increased to Rs. 95.  

An article stated that India’s cotton yarn exports had decreased by 59 percent in the first six months of 2022. Less production has caused the prices to go up by 140 percent.  Prices in the Indian market have remained 20-25 percent higher than the international. They have reached up to Rs 1.1 lacs per candy in the last few months of the previous year.

Kamlesh J, owner of a cotton mill in Chickpete said that prices of cotton and cotton yarns have seen a rapid rise in the last six months, causing retail sellers to face losses. “Earlier, the price of a candy (746.48 Kilos of raw cotton)  ranged from Rs. 30 to Rs. 35 thousand but it had shot up to ne lakh rupees  per candy recently .” he said. .

He added, “Due to less cost of cotton available in Bangladesh, Pakistan and China, the Indian market is partially facing a setback.”

  • Man working at cotton mill

Indian Cotton Market and the World

A report by Cotton Textiles Export Promotion Council (TEXPROCIL)  shows the rising  prices of Indian cotton in comparison to its neighboring counter parts has increased its viability and competition in the global market.

All of these factors have impacted the businesses of cotton cloth sellers like Harish Kumar. He said, “There has been a 20 to 22 percent rise of cotton and cotton-based goods post pandemic last year, the material that  was available for Rs. 100 is now available at Rs. 135 and is being sold for Rs. 150.  The price rise is causing customers to shift from using cotton to other material that is cheaper . This is eventually affecting our businesses.”

Reasons for Declining Import

Abhishek, the owner of Bengaluru-based cotton mill, Manoj Cotton House said that the rise in price of cotton has increased due to crop failure  last year. “India is known to be a major contributor of cotton but factors like poor cropping and increased domestic consumption has resulted in rapid decline of Indian cotton exports,” he added . This has impacted his 30 year-old business, he said, “We have lost a lot of customers and are not getting our supplies on time. ”

He added, “The cotton industry is very intensive and time-consuming, it takes a month for the finished product to reach markets. The Grey(the first product that comes out after the cotton is weaved) that gets produced goes for weaving. Due to crop damage, there has been a decrease in the quality of the grey produced. It is 2.1 lac meters grey that gets produced now in comparison to 2.7-8 lac meters that once used to be.”

Sonam Arora, economics professor said that with cotton exports of India dropping, there would be fall in the income level of the country . “Exports are the major source  of foreign exchange so if this continues to drop, so will the foreign exchange reserves leading to more probability of depreciation of currency  in the international market.”  


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