The temporary restoration of the Incremental Exports Incentivisation Scheme (IEIS) for Indian cotton yarn exporters will make local spinning more viable in 2014, an industry spokesman has said.

Under the IEIS, exporters earn credit amounting to 2% of the duty on annualised increases in exports over qualifying periods and for particular markets, and may either use this to import industry-related goods for themselves or sell the credit to another yarn manufacturer.

The industry believes central government's decision to withdraw the incentive in September last year was intended to discourage cotton yarn exports in favour of higher value-added finished textiles.

Cotton yarn prices in the local market have been affected by the earlier decision.

"The prices of cotton yarn are not increasing in tandem with the rise in cotton prices in India," DK Nair, secretary-general of the Confederation of Indian Textile Industry, told just-style.

India's Directorate General of Foreign Trade has now restored the benefit from for the period from September 2013 to 31 March 2014.

"Since this year's exports of cotton yarn are going to be higher than the previous year, this will be beneficial to the exporters," Nair said.

With so little time remaining, the move may have only limited impact on Indian cotton yarn prices - but will help exporters "to cut their losses or improve profits," Nair added.