Indian Association Issues Plea Over Export Contracts

By Jim.Robinson|November 12, 2009

The Tirupur Exporters Association (TEA) represents exporters of cotton knitwear with production facilities located in Tirupur, India. The “Knit City,” as Tirupur is known, is one of India’s fastest growing cities, averaging a 30 percent annual growth rate since 1988. On Monday, the TEA issued an open letter calling on the government of India to temporarily suspend registration of new cotton export contracts until at least the end of February 2010. The TEA claims such action will help sustain their knitwear garment sector while speculation by international cotton traders affects the market.

“You are aware that the major raw material cotton plays a major role in the textile industry, it accounts for more than 60 percent of our fiber consumption and we are the second largest producer, consumer and exporter of cotton. Tirupur, the major cotton knitwear producer and exporter of India, requires the cotton yarn price at competitive rate otherwise it is not possible to compete with China, Bangladesh and Vietnam, etc.” the open letter begins, in part.
  
“As the quality is a main determining factor to sustain in the global market, any fall in cotton quality will have a detrimental effect on garment exports from Tirupur and ultimately lead the buyers to our competing countries,” the letter continues.

Finally, the letter concludes: “Government introduced registration of export contracts for cotton last year and therefore the Textile Commissioner is in a position to suspend cotton exports by suspending registration of export contracts, without any other procedural requirements. Already export contracts for over 10 lakh bales have been registered with the Textile Commissioner from the current year’s crop and another 10 lakh bales are reportedly with the traders for registration. Suspending cotton exports temporarily will help the knitwear garment sector to sustain in the global export market.   We shall therefore request the Hon’ble Minister’s intervention to immediately suspend further registration of cotton export contracts at least up to the end of February 2010. The situation can be reviewed after that, when the trends of production and consumption would be clearer and an assessment can be made if any exportable surplus is available.”

Source: Tirupur Exporters Association