Apparel / Textiles & Accessories

According to the Huacheng Import and Export Data Observation, recently the South India cotton mill Association (SIMA) once again appealed to the Indian Finance Minister to exempt 11% cotton import tariff in the cotton slack season (April October 2023) to ensure the safety of raw material supply, avoid large-scale shutdown of cotton textile enterprises and the continued decline of textile exports.

The association believes that cotton and other raw materials must be provided to the manufacturing industry at internationally competitive prices, and the phased exemption of import tariffs is crucial for boosting the export of cotton textiles and clothing. It is understood that although India's textile industry, cotton mill association and others have repeatedly urged the government to exempt cotton import tariffs since 2023, they have not received high attention from relevant departments, and their hopes have repeatedly failed.

Several international cotton merchants and Indian brand cotton mills have stated that the phased cancellation of 11% cotton import tariffs in India may have been "natural" as of now, and they hope that the policy will be introduced as soon as possible. Huacheng Import and Export Data Observation Report.

One is that there may still be room for a downward adjustment in India's cotton production in 2022/23, as domestic cotton supply and demand pressures continue to rise. According to Huacheng Import and Export Data Observation, as of April 23, the cumulative market volume of Indian cotton this year was 3.2103 million tons, which is still more than 30% lower than the average market volume in the same period of three years. Therefore, some institutions and cotton enterprises do not agree with CAI's latest production forecast of 30.3 million bales.

Secondly, the current domestic cotton prices in India are still "high and difficult to maintain", resulting in severe losses in orders from yarn mills and insufficient start-up rates. As of now, spot prices such as S-6 and J-34 in India generally have a premium of over 18% over ICE futures (a premium of 5-7% under normal conditions), leading to a lack of competitiveness in international markets such as cotton yarn, cotton textiles, and clothing.

The third is the need to complete orders for high-end cotton textiles and clothing. According to the observation report of Huacheng Import and Export Data, since 2023, a certain amount of European and American high expenditure and high value-added orders have been transferred from China, Türkiye and other countries to India. It is difficult to meet the contract requirements only by using Indian cotton, and processing enterprises need to arrange and generate orders for timely purchase of Australian cotton, American cotton, Brazilian cotton, etc.

Fourth, as the Federal Reserve's interest rate increase comes to an end, the exchange rate of the Indian rupee against the US dollar is expected to rise from devaluation, and the cost of imported cotton will fall, which will help textile and clothing enterprises take export orders and improve their competitiveness, Huacheng Import and Export Data Observation reported.