India: Slowdown In Cotton Import Worries US

The world's largest exporter of cotton, the US, which happens to be the principal supplier of the fibre to India is worried over the slow pace of imports into the country. Ironically, the slowdown has occurred during a season when domestic output here is less than that last year.

Over the last three years, India's cotton imports have shown strong growth because of inadequate quality and availability in the domestic market as well as growth in demand from export-oriented textile mills. From 16 lakh bales in 2000-01, cotton arrivals spurted to 18 lakh bales in 2001-02.

In the current year 2002-03, India's cotton production is estimated to be down some 10 per cent as a result of which global cotton exporters — already facing low prices — had anticipated a significant expansion in India imports. But that has not materialised.

According to an estimate of the US Department of Agriculture (USDA), India's cotton production in 2002-03 is 24.17 lakh tonnes, down from 26.78 lt of last year. A consumption growth of 2.4 per cent from last year's 28.90 lt meant requirement of 29.61 lt virtually unchanged from the numbers seen in 1999-2000 and 2000-01.

USDA has forecast India's cotton import this year at 3.27 lt, versus 3.81 lt of 2001-02, that is a decline of 14 per cent. In its latest report, USDA has lowered its import forecast for India by three lakh bales.

``India's lagging imports are one of the biggest surprises of the marketing year thus far, and US exports are particularly affected'', the agency said.

In the marketing year 2001-02, US cotton exports to India more than tripled to over 10 lakh bales and the US share of Indian market rose from 20 per cent to 60 per cent. India became the third largest destination for US cotton after Mexico and Turkey, representing 9 per cent of total US exports.

As of the end of January 2003, US cotton export commitments to India were only about 1.5 lakh bales, compared with nearly 9.0 lakh bales this time last year. But there is hope yet, the agency feels.

``India's import demand will rise significantly in the second half of the season as domestic supplies tighten. With reduced exportable supplies in Australia and West Africa, the US is positioned to capture a substantial share of India's forecast import demand,'' the agency has asserted.

Meanwhile, efforts to strengthen the domestic cotton economy are gathering some momentum. With the Technology Mission on Cotton encouraging contract farming and the industry and trade representatives beginning to push for reforms in the cotton sector, there is hope India may soon begin to produce quality cotton to meet internal needs.