Restoration of incentives to boost cotton yarn exports

The government has restored export benefits for cotton yarn under the ''incremental export incentivisation scheme'' giving a fresh boost to cotton yarn exports.

The government's notification, issued on Wednesday, makes export of cotton yarn eligible for benefits under the Incremental Export Incentivisation Scheme for all of 2013-14.

The scheme, introduced at the beginning of this fiscal, was withdrawn in September 2013.

Spinning mills seem confident this year as a surge in the demand for cotton yarn is expected in the export market and domestic apparel and home furnishing sector.

The incentives announced for incremental exports entitle exporters to duty credits worth 2 per cent of the exported goods which could be used to import inputs duty free or sold in the market.

''Withdrawal of the benefits of the incremental export incentivisation scheme (IEIS) had dampened the enthusiasm of cotton yarn exporters and the restoration of these benefits will reflect in the export performance during the remaining part of the year,'' said Prem Malik, chairman, Confederation of Indian Textile Industry.

Exporters also want the government to restore the benefits for cotton yarn under the Focus Market Scheme, which was also withdrawn in September last year.

Under the Focus Market Scheme, incentives are given for exporting to identified markets.

''Concerted efforts were being made by the industry to penetrate new markets, especially in South America and Africa, on the strength of the scheme and restoration of these benefits would encourage such efforts and help the industry to meet the high logistics costs in export of cotton yarn to these regions,'' Malik said.

The Directorate General of Foreign Trade, in a notification dated January 23, clarified that the ineligible category of cotton yarn inserted by a previous notification on September 25, 2013 stands deleted.

Spinning mills seem confident this year as a surge in the demand for cotton yarn is expected in the export market and domestic apparel and home furnishing sector.

Export of cotton yarn from the country is expected to touch 1,500 million kg by FY14 from 1,107 million kg in FY13, according to a study by Credit Analysis and Research Limited.

Indian mills as better placed compared to China, Pakistan and some South American countries. According to T Kannan, chairman of CII Textile Committee and managing director of Thiagarajar Mills.

''We have better operational productivities in terms of machine and labour. China had been subsidising power and labour costs to the mills. This has been withdrawn for two years. So, the fundamentals are playing in favour of India.''

Indian mills are making a killing as production of cotton yarn in China has slowed. Also, cotton available to Chinese yarn makers is costlier by 10 per cent.