The cotton production has touched a new low of 161.77 million kg in April 1998 for which period statistics are available now. This is in sharp contrst to the monthly production level of 194.56 million kg, achieved in July 1997 when the currency crisis first started in Thailand.

East Asian countries used to absorb nearly 50 per cent of India's cotton yarn exports and in the wake of currency turmoil, the demand from that region suddenly contracted forcing Indian spinning mills to curtail their production.

Moreover the domestic demand too was far from encouraging.A number of small spinners went out of production. And that situation is continuing even now. Also the textile industry has now raised the demand that the government should allow the small units to close down.

For the small spinners, closing down is not much of a problem. It is, however, difficult for millsin the organised sector to do so unless they are able to spare and shell out huge VRS dues that may have to be settled. That is why the mill industry is now seeking subvention from the government to eliminate unviable excess capacity.

Unplanned idling of capacity is evident from the sustained fall in production in the first four months of 1998 compared with the same period of the preceding year.

This shows that cotton yarn production in the country has fallen by as much as 21.92 per cent in the first four months of the current year compared with the same in the corresponding period of the earlier year.

It may be difficult to get this trend reversed unless the East Asian economies revive.

Unfortunately countries like Indonesia and Taiwan on the one hand and Pakistan on the other hand are offering stiff competition to Indian yarn.Meanwhile open-end spinners in Hong Kong have started competition with ring spinners. Indonesia has also emerged as a big competitor even in the third countries, its mainadvantages being cheap labour and highly depreciated currency. Pakistan which is also a strong competitor in the East Asian region has been lately diverting its attention to markets in the USA, Canada and even Mexico. Though it is believed to have crossed the quota limit for its exports to the USA, the latter has so far not intervened in the matter.

Some Central Asian countries are also offering their cotton yarn at competitive rates. Thus the prospects for cotton yarn exports from India remain dim at present. In the domestic market, there has been some shift in offtake towards medium and finer counts. As such their prices have hardned a little.