India's ban on cotton exports will force farmers to switch to other crops

by:JIYALI     2021-08-05
The Indian government has recently taken measures to protect the interests of its cotton farmers, but it has not succeeded in preventing the suicides of cotton farmers in Vidarbha.  The measures taken by the government include relief plans, especially relief for cotton farmers in Vidarbha. However, despite the promulgation of these measures, suicides by cotton farmers in Vidarbha are still occurring. Therefore, it is more important now that the government must directly contact cotton farmers to understand their needs before considering policy adjustments.   Recently, the Ministry of Commerce received a warning from the Union of Indian Textile Industry (CITI) that India’s export of cotton to China harmed the interests of the Indian textile industry. If the government's attention is diverted and no longer pays attention to cotton production, cotton farmers will suffer even greater pain.   Compared with the price of cotton in India and the price of cotton in China, it is obvious that the price of cotton in China is very cheap. Therefore, it is groundless to say that Chinese textile mills get cheaper raw materials.   At the same time, China’s cotton imports are subject to quota management, and the import tariff is as high as 40%. On the contrary, Indian imports only require an open general license, and import tariffs are negligible. This means that Indian cotton mills can freely import cotton at any time. As long as the international market price is competitive, they only need to get the advance application. License, you can import cotton with zero tariffs.   On the other hand, Pakistan and Bangladesh textile mills are in the same situation as China. So far, the Indian textile industry has benefited from relatively low cotton prices, thereby maintaining the competitiveness of the Indian textile industry in the international textile market.   India has enough surplus cotton, even if a certain amount of ending inventory is maintained. The growth rate of India's cotton exports is not as large as the growth rate of cotton production.   In addition, this year’s cotton production hit a record high, consumption was reduced, ending stocks were the same as last year (2.4 months of consumption), and 9.1 million bales were exported. The balance between supply and demand is easy to maintain.  According to this situation, if cotton exports are banned, India's domestic cotton prices will collapse. The disaster for Indian cotton farmers will come, and the domestic textile industry will not pay reasonable prices for farmers.   India is the second largest cotton producer in the world. If cotton exports are banned or cotton prices plummet, it will cause greater pain to cotton farmers and force them to switch to other competing crops.
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