India Cotton Prices May Drop After Import Tariffs Return To Zero.

In July 9th, according to the long-term requirements of the textile industry, the federal government of India abolished 14% of the import tariffs on cotton and the domestic market price of cotton must drop.

Mr D.K. Nair, President of the India Textile Industry Federation (CITI), welcomed the government's decision.

He said: "this announcement will have a psychological impact, and cotton prices will naturally drop."

Cotton prices have risen 40% since January this year, exacerbating the impact of rupee's appreciation on the textile industry.

In addition, Cotton Traders' hoarded cotton supply will also return to the market, just as what is happening in the international market.

However, this decision will not hurt the interests of farmers because they have no stock in hand.

As import tariffs return to zero, the number of imports is likely to expand.

India now imports cotton from countries of the United States, Brazil and South Africa.

Starting next year, with the cancellation of tariffs, the number of imports will probably expand.

The number of cotton imports has decreased from 1 million 700 thousand bales (170 kg) in 2002-03 to 500 thousand bales in 2006-07.

Imports are expected to be 650 thousand bales this year.

The recent meeting of the Cotton Advisory Committee announced that cotton exports amounted to about 8 million 500 thousand bales in the current year ending September.

But exports may exceed 10 million bales.

The total export volume of 2006-07 was 5 million 800 thousand bales, compared with 4 million 700 thousand export packages in 2005-06.

Cotton production reached 27 million Bao Xingao in 2006-07, and the output could reach 31 million 500 thousand packages this year.