India's Cotton yarn exports to the European Union (EU) and China fell 25% in the past five years, while fabric export fell 7% mainly due to a duty disadvantage vis-a-vis Bangladesh, Vietnam and Pakistan, a Confederation of Indian Textile Industry (CITI) study showed.
According to CITI, Indian cotton yarn exports fell to $3.4 billion in 2017-18, from $4.5 billion in 2013-14.
China, the largest importer of cotton yarn, has replaced India with Vietnam and Indonesia, as they have duty-free access while Indian yarn carries a 3.5% import duty. Similarly, Indian exports of cotton yarn are subject to a 4% duty in the EU, while Vietnam and Indonesia have a 3.2% tariff and least developed countries (LDCs) get duty-free access.
CITI has suggested inclusion of cotton yarn and higher incentive for fabric - from the current 2% - in the Merchandise Exports from India Scheme, to make them competitive.
As per the CITI analysis, India’s raw cotton is going to various markets at zero duty instead of being converted to yarn or fabric, resulting in loss of employment and foreign exchange. India exported $1.9 billion of raw cotton in 2017-18.