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Cotton Prices Started Softening Of Late, Govt To Formulate PLI 2.0 For Textiles: Secretary


Cotton prices have been higher for quite a while now and the government is in the process of formulating PLI 2.0 for the textile industry, Textiles Secretary Upendra Prasad Singh said adding that the next round of PLI should be for apparel & garments. He, however, told CNBC-TV18 that of late, the cotton prices have started softening.

Singh added that 5-7 lakh bales of summer cotton is expected to come in which will help in softening prices further. He also said cotton exports have seen a growth of 10-12 per cent and the textile sector has a fragmented value chain. He informed that the government has had two rounds of discussions with respect to textile exports.

The textiles secretary said raw cotton export is not feasible right now. On the production-linked incentives (PLI) scheme, he said the number of products allowed under the PLI is limited.

The country’s cotton exports increased to $9.9 billion in April-February FY22, compared with $6.3 billion in the full financial year 2020-21. In April 2022, exports were up 57.6 per cent to $52.5 million from a year ago.

Recently, India’s readymade garment exporters said they want a ban on cotton exports. They complained of facing a severe liquidity crisis because of rising cotton and yarn prices, which was making it difficult for them to deliver shipments to their foreign buyers on time, according to a report. The report, quoting industry sources, added that if consignments are delayed beyond 15 days, foreign buyers ask the suppliers to offer 30 per cent discount or bear air transport cost, which can wipe out profits.

Last month, Union Textile Minister Piyush Goyal held a meeting with stakeholders from the cotton value chain to discuss the unprecedented price rise witnessed in cotton and yarn prices in the current season. The minister “gave a clear and loud message to all stakeholders to resolve cotton and yarn price issue, in the spirit of collaboration rather than competition and super profiteering, without pushing the government to intervene as it may have long term impact on cotton value chain”, according to a ministry statement last month.

In the meeting, views and suggestions for softening cotton and yarn prices were deliberated on an urgent basis. It was pointed out that cotton productivity is the biggest challenge in the country, resulting thereby less cotton production despite the largest area under cotton cultivation, it added.

The predominantly cotton-based textile industry is facing a long-drawn recession on the cotton front as the cotton price increased from Rs 44,500 per candy in February 2021, when an 11 per cent import duty was levied on cotton, to Rs 90,000 per candy in March 2022. The steep increase in cotton price and its impact on the prices of yarns and fabrics is severely impacting the potential growth of the cotton textile value chain.

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