India Removes Restriction on Cotton Yarn Exports

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India’s restrictions on cotton yarn exports are officially a thing of the past. On March 31, India’s Director General of Foreign Trade removed the restrictions on cotton yarn exports effective April 1st for the fiscal year 2011/12.

According to the revised regulation, cotton yarns (other than sewing threads) not put up for retail sale are now listed under the “free list.” Contracts for cotton yarn exports must be registered with the Directorate General of Foreign Trade and can be shipped once verified by the Indian customs.Prior to the lifting of restrictions, cotton yarn exports were capped at 720 million kgs for the 2010/11 fiscal year, which ended on March 31st, 2011.

Dr. Selvaraju, Secretary General of the Coimbatore-based Southern India Mills Association (which has over 400 spinning mills as its members) said that “India can export up to 1.2 billion kgs of yarn because the domestic demand has shrunk.”

The market in the upstream processing industry in Tirupur has shrunk by 30%, meaning spinning mills’ production capacity can easily meet the domestic demand, Dr. Selvaraju said. He added, however, that the Ministry of Textiles could ask for export restriction of 845 million kgs of cotton yarn later this year.

Sources say this latest change in India’s export policy for cotton yarns has not been well-received by the Tirupur Exporters Association, which represents knitters and readymade garment exporters.

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