A Raw Deal

China, the world's largest cotton importer, accounting for more than 60 per cent of total raw cotton exports from India, has upset the calculations of Indian cotton sector following a marked fall in demand from that country. Cotton exports from India have been falling year-on-year and India may not be able to export more than 7-7.5 million bales in 2014-15. The country's cotton year runs from October to September. One may recall here that Beijing in January announced it would scrap cotton stockpiling. There is also some confusion since the industry in that country has been waiting for more clarity on the Chinese government's cotton policy for the last three months.

India exports more than 50 per cent of cotton to China, with the rest going to Bangladesh, Pakistan and Vietnam. India, the world's No. 2 producer and exporter of cotton, has shipped a total of around 8.2-8.5 million bales so far in 2013-14, and is expected to grow to around 9.2-9.5 million bales by September this year. Due to harvest cycles, the vast majority of exports typically occur in the first half of the Indian crop year. The nation exported 10.1 million bales in 2012-13, falling from 12.9 million bales the year before. China-in February-imported 147,317 tonnes of cotton from India, down 20 per cent from the previous month. Meanwhile, the consumption of raw cotton by Indian mills has climbed to 25.8 million bales in 2013-14 from 25 million bales a year ago due to rising demand from textile manufacturers as the global economy shows signs of picking up. In the next crop year, mills' consumption is expected to touch 30 million bales, while in 2011-12, demand from mills totalled 22.3 million bales. Though this is the only silver lining on cotton front, India has to target increasing cotton export to other countries and also find new buyers, so that a cotton crisis can be avoided due to this policy turnabout in China.