MUMBAI, Sept 26 India has withdrawn incentives
for exports of cotton and yarn, a value-added product used by
textile mills, an official order said, a move that could cut
exporters' margins in the world's second-biggest exporter of the
The Directorate General of Foreign Trade (DGFT), a unit of
the trade ministry, did not give any reason for withdrawing the
incentives. To see the official order, click here
Together the benefit of the government's Focus Market Scheme
and Incremental Export Incentivisation Scheme on cotton yarn
comes to around 4 percent of the free-on-board value of exports,
according to Industry body the Confederation of Indian Textile
Currently there is no cap on cotton and cotton yarn exports
but exporters need to register shipments with the DGFT.
CITI urged the government to restore export benefits.
"India is the most competitive yarn producer in the world at
present and, therefore, there are increasing export
opportunities opening up for our cotton yarn," Prem Malik,
chairman of the CITI, said in a statement.
Despite the withdrawal of incentives for overseas sales,
buoyant demand for cotton yarn would offset any fall in export
margins, said M.B Lal, managing director of Shail Exports, a
Trade commitments for cotton yarn exports rose more than 26
percent in August from a year earlier, data from the DGFT
showed, mainly due to rising demand from China, India's biggest
However, exports of raw cotton are seen down at 10 million
bales in 2012/13 from 12.9 million bales a year ago.
India, also the world's second-largest cotton grower, is
forecast to produce a record 35.3 million bales, against 34
million bales a year ago.
(Reporting by Meenakshi Sharma; editing by Mayank Bhardwaj and