By  on August 3, 2010

NEW DELHI — India, the world’s second-biggest exporter of raw cotton after China, is positioned to produce a healthy harvest this year that could help lower world prices and lift global garment manufacturers.

During July, the wettest month in India’s June-to-September monsoon season, farmers planted 9.5 million hectares of cotton, up from 8 million last year.

Cotton farmers have been encouraged to plant bigger crops to cash in on higher prices amid concerns over global cotton shortages. The U.S. Department of Agriculture has warned that demand this year may outstrip supply. World cotton production is forecast to increase to 113.9 million bales in 2010-11, an 11 percent increase from 102.9 million bales in 2009-10, the USDA said. However, world consumption may rise to 119.1 million bales next season from an estimated 115.9 million.

A strong monsoon season, which followed last year’s drought-like weather conditions across much of India, bodes well for the cotton crop, experts said. India’s repeal of curbs on raw cotton exports also has given a boost to cotton farmers. In April, India imposed a ban on cotton exports in an effort to cool down domestic prices that had risen more than 25 percent since October. It partly lifted the ban a month later and, starting Oct. 1, will remove all limits on cotton exports.

While that’s good news for Indian cotton farmers and global textile manufacturers, especially in textile-dependent countries such as Pakistan and Bangladesh, Indian garment manufacturers are unhappy the ban has been lifted. As prices rise and cotton stocks fall, their margins could suffer.

“The government should put a total, permanent ban on cotton exports,” said Rajesh Goyal, owner of Ankit International, a garment factory in the north Indian city of Jaipur that exports to the U.S. and Europe.

Goyal said it was important for the government to support India’s textiles industry, which employs 35 million people directly and 88 million indirectly.

Rita Menon, secretary at the textiles ministry, said the Indian government was developing a policy to govern cotton exports. It would determine how much cotton was needed by the domestic textiles industry and how much Indian cotton farmers would produce before deciding whether export limits were necessary, she said.

Garment manufacturers said the ban in April did little to lower cotton prices because domestic demand surged. As the recovery from the global economic downturn proceeds, clothing brands in the U.S. and Europe — India’s biggest markets — are increasing orders from Indian textile firms.

Cheslind Textiles Ltd., a cotton yarn manufacturer based in Bangalore, said last week it would make its first profit in four years this year because of rising demand from U.S. brands.

The underwear and nightwear market in the U.S. could grow 2.4 percent to $12.9 billion this year, after declining by 8.6 percent last year, according to Euromonitor. Since introducing genetically modified cotton seeds in 2002, India has become the second-biggest cotton producer in the world and an increasingly major exporter. In the first two months of this year, India surpassed the U.S. as a cotton exporter when China imported a record 265,460 tons of Indian-grown cotton.

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