- 28 Apr 2022
- ICICIdirect Research
Government mulls restrictions on cotton exports to improve domestic availability
News: As per media reports, the Union government may impose a temporary ban on cotton exports or put quantitative restrictions on exports if cotton prices continue to surge
Views: The Indian textile industry is reeling under a spike in cotton and yarn prices, impacting production and exports. Cotton prices have doubled in barely a year to over Rs90,000 per candy and imports were not feasible due to import duty as cotton imports were effectively taxed at 11%. However last week the government waived customs duties on imported cotton until September in a bid to soften the domestic cotton prices. If the government further temporarily bans exports of cotton, or puts certain quantitative restrictions on export of cotton, it could improve the availability of cotton for domestic industry and cotton textile product exporters which could lead to softening of cotton prices. In our coverage universe it will be beneficial for KPR Mills and Gokaldas Exports
Impact: Positive