Russia's textile industry, which took off after the removal of a 20 per cent tax on raw cotton imports and the fall of the rouble, could see its competitive advantage disappear, reports Etexx.

The agricultural attaché at Moscow's US embassy said the tax could be reinstated, which would drive up the production costs of Russian textile manufacturers.

Russia's textile production dramatically rose in 2000. Production of cotton fabrics increased by 44 per cent compared with the previous year to 1.82 billion sq ms, and by 68 per cent compared with 1998. Exports of cotton fabrics rose 31 per cent to 434.83 million sq ms. Ukraine received nearly a quarter of those shipments, followed by Italy, Austria, Belgium and Lithuania.

Russia continues to import its cotton from Uzbekistan but is also diversifying supplies from other Central Asian republics, such as Kazakhstan, Turkmenistan and Azerbaijan.