4 Reasons Why Cotton Export From India is Still Profitable in 2019 - Saya Exim India
Be it raw cotton, cotton seed or cotton textiles, India has been a leader in producing and exporting cotton since the olden times.
Let’s take a look at the current scenario of the Indian Cotton Industry.
The Cotton textile industry is the largest organized industry in India. A tremendous growth has been seen during the last four decades and about 16% of capital and more than 20% of the industrial labour of the country is occupied by this industry and the total employment rounds up to 15 million workers.
There are 1,719 textile mills in India out of which the public sector has 188 mills, the cooperative sector holds 147 mills and 1,384 are in the private sector. Apart from all the mills, there are several thousand small sized factories comprising of 5-10 looms per head.
The states of Maharashtra, Gujarat, Andhra Pradesh and Madhya Pradesh are the leading cotton producing states in India. These states have a dominance due to their tropically wet and dry climate.
The Cotton Textile Production in India is divided into three main sectors:
● Mills
● Power looms
● Handlooms
Let’s head to the main reasons that make Cotton Export Profitable.
1. Increasing Value Additions Driving the Market
Cotton is commercially used in various forms as cotton fibre, cotton seed and oil. Around 64% of the cotton produced is used in making apparel, 28% for home furnishings and remaining 8% is utilized for industrial use. Cotton seed is utilized in animal fodder for compound feed purposes. In the food industry, cotton is used in the form of cotton seed oil in production of various edible products.
These multiple uses and continuous demand in different industries of the cotton crop make it a diverse and useful product for export trade.
2. Increasing Demand for Import of Cotton Textiles
Global consumption of cotton textiles is estimated to register a CGAR of 2.0% during the forecast period. During this period the import is set to boom. United States is the leading importer of cotton textiles and has seen an increase of 1.10% during the Jan-Jun 2018 period, China reported a growth of 5.33% during the same period. Vietnam, the largest importer of cotton textiles has seen an increase of 3.80% in it’ import followed by Germany and Bangladesh with 8.04% and 5.47% respectively. Japan, Hong Kong, France, Italy and UK have also seen a positive growth during the Jan-June Period.
3. Increasing Demand for Import of Cotton Yarn
If you’re a cotton yarn manufacturer, then you’re in for a good news. The global imports of cotton yarn during Jan-June 2018 reached USD $5.51 billion which is a significant increase from USD $4.92 billion in Jan-June 2017, making an overall growth of 11.98% in USD terms.
China, the largest producer of cotton reached a level of USD $1.34 billion in Jan-June 2018 recording a growth of 20.32% which shows the need of Cotton Yarn is ever increasing and is set to go upwards in the future.
4. Government Support
The Indian government has been known to support exports with various schemes like Market Development Assistance Scheme, Export Oriented Unit (EOU) Scheme, Market Access Initiative (MAI) Scheme, and many other schemes that benefit exporters of the country.
Out of these many schemes, Cotton Textile Exporters can take advantage of the following schemes:
● Merchandize Exports from India (MEIS) Scheme
Launched in April 2015, the MEIS provides duty reward to eligible textile and apparel categories to an extent of 2-5% of FOB value in the countries categorized as per the criteria prescribed under the Scheme.
● Interest Equalization Scheme
The Interest Equalization Scheme was introduced for pre and post shipment rupee export credit for five years, starting April 1, 2015. This scheme provides relief to the exporters from India who face extensive competition because of higher interest rates than competing countries like Vietnam, China etc.
● Market Access Initiative (MAI)
Market Access Initiatives (MAI) Scheme is an Export Promotion Scheme envisaged to act as a catalyst to promote India’s export on a sustained basis. The scheme is formulated on focus product-focus country approach to evolve specific market and specific product through market studies/survey. Assistance would be provided to Export Promotion Organizations/ Trade Promotion Organizations/National Level Institutions/ Research Institutions/ Universities/Laboratories, Exporters, etc., for enhancement of export through accessing new markets or through increasing the share in the existing markets.
● Market Development Assistance (MDA)
Marketing Development Assistance (MDA) Scheme is to support/assist exporters/EPCs to undertake export promotion activities for their product(s) and commodities through Focus export promotion programmes in specific regions abroad viz. FOCUS (LAC), Focus (Africa), Focus (CIS) and Focus (ASEAN + 2) programmes. The incentives under this Scheme are primarily given to develop the already accessed markets abroad. The utilization of scheme is administered by the E&MDA Division in the Department of Commerce.
To know more about these schemes, please visit: https://bit.ly/2sM2Xca
If you’re a cotton producer or cotton product manufacturer with quality quotient matching that of Export Quality, the time is good for you to get into the export market and increase your sales by multiple folds.
To know more about how to get started with Export, visit (Saya Exim website URL) and get complete support from initiating all the procedures to exporting to the buyers.
