BUSINESS

Cotton looks stable in FY18: Ind-Ra

India Ratings (Ind-Ra) has maintained a stable outlook for cotton textiles for the next financial year following steady input prices, healthy capacity utilisation and healthy domestic demand.

The agency has revised its cotton outlook to stable for fiscal year 2017-18 from negative for the fiscal year 2016-17.

The status will stem from fiscal incentives and implementation of the Goods and Services Tax (GST) that will improve the industry’s export competitiveness, Ind-Ra said.

Favourable trade agreements with the U.S. and Europe will also lead to a significant increase in India’s exports and a higher-than-expected domestic demand would be positive for the sector, it added.

Moreover, Ind-Ra said, the U.S.’ exit from the Trans-Pacific Partnership is likely to realign textile trade and investments, which were diverted to Vietnam over FY16-FY17, towards the Indian subcontinent.

The stable cotton outlook is in view of an increase in acreage, a rise in supply in the first quarter of FY18 (due to demonetisation) and a decline in global inventory assisting with a balanced supply, Ind-Ra said. It also expects operating profitability levels of Indian cotton ginners and exporters to moderate in FY18.

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