Sharply depreciated currencies of some east Asian countries make imports costlier for them. This forces foreign suppliers to prune their prices to remain in business.

According to leading exporters shipments of cotton yarn 30s (combed) are now being made at as low a price as $2.72 per kg (C&F). This yarn could fetch $3.40 per kg about a year earlier, and $2.85 per kg not long ago.

Several factors are said to be responsible for this plunge in export prices, As east Asian economies have suffered a set back, their demand for yarn has been sharply reduced while several countries try to sell their cotton yarn in these markets even by lowering their prices. Among main competitors are Pakistan, China, Indonesia, Egypt, Syria, Tanzania, Turkey and CIS countries.The recent 4.2 per cent devaluation of its currency by Pakistan has made its exporters more competitive. Besides, China has been rapidly restructuring and modernising its textile industry to make it more competitive. No doubt the union textiles ministry has been talking about a Rs 25,000 crore modernisation programme for the Indian textile industry, but the requisite funds are nowhere in sight. So the modernisation of Indian mills is no more a pipe-dream at present. Some of the countries in East Asia have now started importing cotton instead of yarn and get the fibre converted into yarn at a nominal conversion rate in Indonesia where labour costs are low and power is cheap. Also, Indonesia itself is importing cotton, particularly from the CIS region and offering its yarn at cut throat prices.

Economies of Malaysia and Singapore are slackening after resisting South-East Asian flue for some time. Though Hong Kong's currency remains pegged these licences has shrunk to nominal levels as the list of items whichcan be imported under these licences has not been revised and some of the SIL items which were earlier remunerative are no more so. As a corrective measure, all consumer non-durable and durable items can be allowed to imported under these licences. If this is done that may more up the premium on SIL licences so as to provide some incentive to cotton yarn exporters through that route. Even the out-dated export policy for cotton yarn requires to be revamped so as to reduce dominance of those who are able to get export quotas merely to sell these at a premium instead of effecting exports themselves.

Nearly half of the powerlooms remain paralysed at present in view of the off-season and abnormal delays in getting payments from buyers of fabrics.