It might have increased further in the subsequent months. This is despite the fact that cotton yarn production came down from 183.52 million kig in June 1997 to 164.24 million kg in the same month of 1998. Many spinning units have drastically curtailed their production in view of the subdued demand both in the domestic and overseas markets. Several 100 per cent EOUs which were set up when yarn exports were booming are now morose as the world export markets are in the reverse gear.

In order to help cotton yarn exports the government announced some incentives for yarn exporters during 1998 but they have almost flopped in achieving their objects. Despite the enlargement of the list of items that can beimported under Special Import Licenses (SILs) the premium on such licenses has remained glued to a disappointing level of about 1.5 per cent. Delinking of cotton yarn exports from the the hank yarn obligation has also failed in giving push to yarn exports.

Recently the Union government has extended the benefit of tax-exemption up to 10 years from five years so far. However spinners are heard arguing that the benefit of such incentive will be available to them, only if they earn profits of which they are not quite sure at present.

On the whole, despite such incentives cotton yarn exports from the country in the first 10 months of 1998 have plunged by 11.74 per cent to 384.57 million kg from 435.70 million kg in the same period of the preceding year.The average price realisation from exports in October 98 stood at $2.90 per kg compared with $3.25 per kg in the same month a year ago. Exporters are naturally a worried lot at the start of the new year. They do not see as yet any ray of light at the end of thetunnel.

This is because the accumulation of unsold stocks of yarn in various countries keep the export demand and prices subdued. Furthermore, economic slowdown in the world, apart from recession in Japan and continuing currency crisis in South East Asia shave depressed the demand for textiles in general. Some recent forecasts indicate a further slow down in the world economic growth in 1999. This does not augur well either for the demand either for textiles or for yarn. In Europe and USA many spinners are having substantial stocks of unsold yarn, as consumers find imports to be cheaper.

Some of them are contemplating closure of their units or cut-back their production. The situation is equally bad in the Far East. Spinners in Taiwan and Hong Kong are reportedly complaining that the business has been at its worse. Japans apprehends further shrinkage of its spinning capacity.

When the currency crisis began in South East Asia from July 1997, there were expectations that these problems might soon beover. However, even after 18 months since then, there is no end to the crisis in those countries though their currencies have improved considerably from the bottoms to which they had fallen.Thus the local exporters are as yet not much hopeful about prospects for 1999.