[ad_1]
The depreciation of the Indian rupee against the US dollar is adding misery for the domestic textile industry. Nearly 10 lacs bales of cotton imported by textile mills are on their way to India, for which orders were placed few months earlier. However, cotton prices have fallen in the meantime and the rupee depreciation is compounding the problem further.
In mid-April this year, the Indian government had decided to remove Basic Customs Duty (BCD) on import of cotton, to give relief to the textile industry from the then costlier cotton. The industry was not much enthusiastic after removal of the duty due to delay of more than two months. However, few domestic spinning and composite mills entered into import deals at very high prices to ensure supply in off-season.
The depreciation of the Indian rupee against the US dollar is adding misery for the domestic textile industry. Nearly 10 lacs bales of cotton imported by textile mills are on their way to India, for which orders were placed few months earlier. However, cotton prices have fallen in the meantime and the rupee depreciation is compounding the problem further.
At that time, cotton was traded above ₹100,000 per candy of 356 kg in the domestic market. ICE cotton was also hovering above US cent 145 a pound, which was worked out to more than ₹100,000 per candy.
Subsequently, however, cotton prices began to fall in May, and at the end of June, domestic and global markets witnessed sharp decline. According to trade sources, cotton shipments were also delayed due to paucity of containers and other reasons. The mills could not get the shipment for consumption as per their schedule. As a result, disparity widened for imported cotton due to crash in domestic prices. Therefore, it has now become extremely difficult for the mills to manage higher cost if they consume imported cotton.
Some time ago, traders told Fibre2Fashion, “The mills tried to bring down cost by using domestic cotton with imported supplies. But depreciating rupee has made the situation more complicated for the importers.” According to the importers, the cotton import deals were already done at higher prices. Depreciation of rupee has further increased the cost of shipments.
N Selvaraju, general secretary of the South India Mills’ Association told Fibre2Fashion, “Depreciation of rupee has added to hardships for cotton importers. The market conditions have turned 360-degree since April 2022. Weaker rupee and fall in cotton prices have forced textile mills to reconsider import deals. The mills are in talks with the suppliers to reduce the import price or cancel the deal. If the suppliers do not agree to this, there is possibility of legal dispute in import deals.”
Fibre2Fashion News Desk (KUL)
[ad_2]
Source link
