India is the second-largest exporter of cotton in the world. Interestingly, it is also one of the largest importers of the product. An anomaly, you may think. But there are a multitude of reasons to explain this. The growth of the textile industry and the demand for extra long staple cotton has resulted in a massive increase in imports. In fact, implementation of GST is further expected to give its imports a boost. The Dollar Business investigates if now is a good time to start importing cotton.
India, we all know is a major global player when it comes to textiles and apparels, especially those made of cotton. To put matters into perspective, in FY2017 alone, India’s exports of cotton and textiles & clothing clocked $6.63 billion and $36.66 billion, respectively. We also know that India is a major producer of cotton. What many of us may not know though is that India's textiles and apparel industry is highly import dependent. Of course, the usual reason applies – we consume more than we produce. But then, there's is another angle to it and that is India cannot grow a few varieties of cotton – especially a variety that is known as extra-long staple (ELS) cotton or ‘extra-ordinary cotton’.
And what is ELS cotton? It is an extra-fine cotton that is used for making superior cotton fabrics. In fact, it’s quite easy to identify ELS-made fabrics in the market because they look more white, smooth, strong and above all are expensive than others. But, other than ELS cotton, India also imports all other staple lengths of cotton. In fact, in FY2017, India’s total imports of cotton (of all staple length, combed or uncombed) witnessed a y-o-y jump of 142%. And, this indicates that importing cotton is a big business!
A SEASONAL AFFAIR
This story is from the August 2017 edition of The Dollar Business.
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This story is from the August 2017 edition of The Dollar Business.
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