Up to date: Oct 06, 2020 17:03 IST
Mumbai (Maharashtra) [India], October 6 (ANI): The US withhold release order on cotton and apparel imports from particular producers in Xinjiang Uygur Autonomous Region (XUAR) could escalate global trade tensions and thus have adverse implications on Indian textile sector within the brief run, India Ratings and Research (Ind-Ra) mentioned on Tuesday.
Nevertheless, it might be useful within the medium time period, added Ind-Ra.
There’s a threat of additional sanctions by the US authorities on curbing imports of the merchandise originating from or having linkages with XUAR. Moreover, importers within the US are prone to be involved about any financial, authorized or reputational issues on any of their provide chains linked to XUAR.
This motion could have spooked China and it might resort to retaliatory measures. Cotton procurement from america might be delayed by Chinese language mills, resulting in beneficial provides from Brazil and India — each of that are prone to have excessive inventories.
Whereas demand from america might affect general cotton demanded by China, the value-addition might regularly transfer out of China to different geographies. Nevertheless, that is extra of a medium term-phenomenon.
Indian yarn players have excessive export dependence on China (FY16 to FY19: round 30 per cent) which diminished to round 20 per cent for the three months ended June on account of decrease demand and rising competitors from Vietnam and Pakistan.
The trade-war extension and labour associated points might result in the creation of extra yarn and cotton demand from neighbouring international locations to the tune of 0.5 million tonnes and eight to 10 million bales.
Ind-Ra mentioned international locations like Pakistan and Brazil have a pole place in comparison with India resulting from their preferential standing. Nevertheless, India can get a share of the pie, given the low-cost uncooked materials availability and established the presence of Indian textile gamers in america.
The company seen the shift in demand might result in a wholesome restoration in credit score metrics and ease of liquidity stress for exporters in FY21. (ANI)