Cotton exports to Iran reported a phenomenal jump of 1070 per cent to 1.85 million kg during 2018-19.

Amid slowing raw cotton exports in recent months, India has seen sharp jump in cotton demand from an unexpected buyer, Iran. After many Western nations imposed trade sanctions on it, Iran’s cotton purchases from India has gone up multiple times in recent months.

Going by the DGFT data, India exported 15,877 kg raw cotton (HS Code 52010015 of staple length 28.5 mm and above but below 34.5 mm) during the year 2017-18.

Phenomenal jump

Cotton exports to Iran reported a phenomenal jump of 1070 per cent to 1.85 million kg during 2018-19. The reason was favourable payment terms in rupee denomination and higher demand.

“Our overall cotton exports will easily cross the CAI's estimate of 46 lakh bales. We are seeing renewed buying interest from countries such as Iran, Vietnam and Bangladesh. Though the quantities are smaller, we are seeing steady orders from these countries,” Atul Ganatra, President, Cotton Association of India (CAI) told Businessline.

An exporter from Mumbai confirmed the increase in cotton consignments to Iran in recent months. “They pay in rupee and the payment comes directly to the Indian bank account. This is possible because they sell oil to India for rupee,” the exporter said, requesting not to be named.

A cotton exporter from Ahmedabad said geo-political uncertainty over Iran and the trade tensions associated with it prompted the cancellation of despatch of goods. However, many small exporters have already exported cotton consignments to Iran.

Q1 exports

As per the latest data, during the April-June period of 2019-20, India exported 5.03 million kg of raw cotton to Iran, up 813 per cent on year-on-year basis.

Besides Iran, Oman is the only country where a growth in export is reported during the period. India exported 1.98 million kg of raw cotton to Oman during the first quarter of this fiscal, up from a nominal 0.02 million kg in the same period last year.

Cotton expert and leading trader Arun Sekhsaria from Mumbai said the Iran phenomenon is not exciting enough to compensate for the current dull exports. “Exports to Iran can't be considered significant from the India’s overall cotton export point of view. They have very small requirement and it will not make a big difference to Indian cotton export prospects,” he said.

Non-competitive prices

Sekhsaria also mentioned that overall cotton export prospects are hampered by non-competitive prices of Indian cotton in the international market. “If present scenario (of higher prices) continues to persist, we fear we will see even less exports next year,” he added.

Recently, Union Textiles Minister Smriti Irani had informed Parliament that India's cotton exports were reported at 44.64 lakh bales till April 30, 2019. According to CAI estimates, exports for the season ending September 2019 will hover at 46 lakh bales, which are lower by 23 lakh bales compared with the previous year’s cotton exports estimate of 69 lakh bales.

Courtesy: Hindu Business Line