Home textile makers worried over increase in cotton price

Home textile makers worried over increase in cotton price

Home textile makers are worried over increase in cotton prices which has gone up to Rs 44,000 per candy from Rs 38,000 per candy at the start of the season. Cotton price is going up due to crop damage. For example, Maharashtra state government’s primary survey has revealed that the pink bollworm and other pests last year affected cotton crop on 34 lakh hectares of land as against the total cultivation on 43 lakh hectares. Though most of the home textile makers are carrying cotton stocks enough for next 3-6 months, their margins will be hit if the price doesn’t come down by then. Further, India is expected to export 7.5mn bales in 2019 from 6.3mn bales in 2018.

Home textile exporters are also worried about the non-continuation of the Merchandise Exports from India Scheme (MEIS). It may be recalled here that the government had increased incentives under the MEIS) to 4% from 2%, from 1st November 2017. However, this scheme might be discontinued as it is not WTO compliant. Alternatively, the government may increase Remission of State Levies (RoSL) on exports and duty drawback benefits. However, till a formal announcement comes from the government textile manufacturers will be left in the dark.

In USA, rapid growth of ecommerce has also forced the Indian home textile exporters to rethink their strategy. Many of these ecommerce companies are price sensitive and ready to compromise on quality thus impacting premium home textile makers from India.

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