Last year, cotton yarn export target was fixed at $1,700 million. However, actual exports during 1997-98 were just about $1,565 million. Taking into consideration the declining export trend that emerged in the wake of the financial crisis in some east Asian markets, the export target for the current year has been drastically curtailed to $1,500 million.

Despite this lower target, a section of exporters feel that given the current market conditions, it may not be possible to export cotton yarn higher than $1,400 million as some international experts predict that the revival of east Asian economies may take couple of years to stabilise.

In the past, when cotton yarn exports from the country were jumping from year to year a number of entrepreneurs had set up EOUs in this sector. Besides, several existing spinning units had expanded their existingcapacities to take advantage of this export boom. Two factors were quite favourable for such exports at that time. One, the demand for cotton yarn was rapidly going up in some of the markets. Two, Indian cotton was cheaper compared with its prices abroad. This situation has undergone a dramatic change. The demand for Indian cotton yarn has dropped sharply in the east Asian markets as they find it very costly in terms of their devalued currencies. On the other hand, Indian spinners have lost the earlier advantage of cheaper cotton in view of the sharp decline in cotton crop this season. Under these circumstances, many SSI spinning units in the south have closed down their factories. Even spinning mills in the organised sector are reported to be curtailing their production by sending away temporary and badli workers and by keeping some spindles idle. It is difficult for the organised spinning units to roll down their shutters in view of the present labour laws. Some other measures devised by spinning millsto counter the present situation, include the increasing use of polyester fibre which is cheaper than cotton. Some spinners prefer to go finer. Cotton yarn exporters are firmly of the view that when overall exports are depressed and the trend appears to be downward there is little sense in insisting on fixation of any ceilings on yarn exports. It is felt that if the present undue restrictions on cotton yarn exports are lifted, it may help the exporters in pushing up their exports at least to some extent, despite the present slackness in the overseas markets.

In the eastern sector, there is some demand for knitting yarn in Hong Kong. There may be some despatches to Japan as well, but the South Korean market is bad. There was some improvement in despatches in March 1998 particularly to Bangladesh, Egypt, Mauritius and some other destinations at lower prices with the result that while shipments in volume terms improved in March' 98 to 40.85 million kg from 32.76 million kg in the previous month the averageunit-value realisation came down further to US $ 3.08 per kg from YS $ 3.09 per kg some in the earlier month. Exports to quota countries fetched good prices but those to non-quota countries were being made at prices as low as US S 2.80 per kg (C&F).The domestic market for cotton yarn remains bad as powerlooms are facing financial squeeze. There are unusual delays in getting payments for fabrics sold by them. Naturally the offtake of yarn by them remains slack. Prices for certain counts have softened further as can be seen from the table.