Amid Ongoing Trade War Between Trump And Xi, Indian Cotton Exports To China Increase

India seems to be gaining from the ongoing trade war between the United States and China. According to the Economic Times, the country has exported 1.5 lakh bales of cotton to the latter since the trade war between the two countries broke out.

"We have contracted between 1.5 lakh bales to 2 lakh bales of exports to China during past 10 days," said President of Cotton Association of India Atul Ganatra.

China is heavily dependent on Cotton imports from the US. However, after the trade war broke out, China has reportedly imposed tariffs on import of cotton from the US. Cotton is one of the 106 American goods on which China has imposed tariffs of up to 25 per cent. China, the largest consumer of cotton, is the second-largest buyer of American cotton with one out of every five bales headed there.

"I cannot overstate the importance of China's market to U.S. cotton farmers and the importance of U.S. cotton in meeting the needs of China's textile industry," said Chairman of the US National Cotton Council Ron Craft.

With tariffs on the import of cotton from the US, Chinese manufacturers who need the raw material in large quantities are likely to shift increasingly to India. The fact that Indian cotton prices are 10 cents cheaper at 80 cents per pound compared to the global price on the Intercontinental Exchange will also be helpful.

Another advantage that India enjoys is low freight charges. This is because ships that call at ports in Gujarat with Chinese goods tend to carry Indian exports at a lower freight cost than to return empty and incur losses. However, Chinese importers will have to make do with smaller vessels unlike bulk shipment from the US.

Of the total export of 55 lakh bales since the beginning of the Cotton Year 2017-28 on 1 October last year, India has exported about 6 lakh bales of cotton to China. India, which is the world’s second-biggest cotton exporter, is hoping to treble shipments to China, Reuters reported. Cotton exports may touch 7 million bales.