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Run-up to the Budget: Cotton sector
Cotton: State of the industry (2000-01)
During the 2000-01 cotton season,
- Cotton production is expected to increase, due to improved conditions for non-irrigated cotton in the central and southern states, and higher cotton prices as compared with those of competing cotton crops (largely tobacco and chilly peppers).
- Imports are estimated to decline, due to a higher increase in the international prices of cotton as compared with that in domestic cotton prices.
Cotton yarn: State of the industry (2000-01)
In 2000-01,
- Cotton yarn production is estimated to increase by 2.5 per cent.
- Domestic demand for cotton yarn, is estimated to increase by 1.8 per cent, due to an increase in the demand for fabrics.
- Exports of cotton yarn are estimated to decline by 6.3 per cent, due to a decline in the demand from Bangladesh and South Korea. However, overall export demand is expected to increase, due to an increase in the exports of fabrics, made ups and garments to the US and the EU.
- Cotton yarn prices increased due to an increase in domestic demand, and an increase in the prices of blended yarn.
- Margins of cotton yarn spinners are expected to increase, due to a higher increase in the domestic and export prices of cotton yarn as compared with the increase in the domestic prices of cotton.
Cotton and cotton yarn: Industry expectations from the Union Budget (2001-02)
The Indian Cotton Mills Federation (ICMF) has asked for the following measures
- Import duty on cotton to be reduced, from 5 per cent to 0 per cent.
- Withdrawal of the duty exemption for small-scale industry (SSI) spinners. (At present, SSI spinners are exempt from the excise duty on cotton yarn.)
- Withdrawal of the excise duty exemption for hank yarn.
- Reduction in the basic duty on cotton yarn, from 8 per cent to 4 per cent.
- The excise duty exemption for hand processors to be made applicable strictly for processors using manually operated machines.
Cotton: Balance sheet
| lakh bales (1 lakh = 100,000) |
1999-2000 E |
2000-01 E |
Change (%) |
| Opening stock
|
36.50 |
37.50 |
2.7 |
| Production
|
155.00 |
167.17 |
7.9 |
| Imports |
18.00 |
8.98 |
-50.1 |
| Mill consumption |
151.00 |
154.78 |
2.5 |
| SSI consumption |
8.00 |
8.20 |
2.5 |
| Non-mill consumption |
12.00 |
12.18 |
1.5 |
| Exports |
1.00 |
1.00 |
0 |
| Closing stock |
37.5 |
37.5 |
0 |
| Stock-to-use ratio (%) |
21.80 |
21.29 |
— |
E: Estimate
Source: Textile Commissioner's Office and CRIS INFAC
Cotton and blended yarn: Excise duty
| |
Excise duty |
(per cent) |
Domestic prices (Rs/kg) |
| Cotton yarn |
1999-2000 |
2000-01 |
Jan 2001
|
| 20s |
9.2 |
9.2 |
84 |
| 24s |
9.2 |
9.2 |
88 |
| 34s |
9.2 |
9.2 |
101 |
| 40s |
9.2 |
9.2 |
123 |
| 60s |
9.2 |
9.2 |
146 |
| 80s |
9.2 |
9.2 |
196 |
| Blended yarn |
1999-2000 |
2000-01 |
Jan 2001
|
| PV 65/35 |
18.4 |
18.4 |
180 |
| PC 48/52 |
18.4 |
18.4 |
125 |
Note: Domestic prices are market prices, and include excise duty
Source: Central Excise and Customs Tariff
Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.
Rediff-CRISIL Budget Impact Analysis
Budget 2001
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