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Monday, Aug 30, 2004

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Cotton mills seek ICA arbitration for imports

Our Bureau

New Delhi , Aug. 29

THE cotton mills in the country have asked the Government to incorporate a provision in the National Foreign Trade Policy (NFTP) stipulating arbitration by the Indian Council of Arbitration (ICA) as a mandatory condition for import of cotton.

Mills importing cotton, according to industry players, are currently facing problems because overseas traders refuse to incorporate detailed specifications in the contract and insist on any arbitration to be handled by the Liverpool Cotton Association (LCA).

"LCA is primarily a body of cotton traders and their arbitration is heavily biased towards cotton suppliers. The small individual mills of India are unable to either get detailed specification included or get any arbitration body other than the LCA stipulated at the time of negotiating the contract," the Indian Cotton Mills Federation (ICMF) has said in its suggestions for the National Foreign Trade Policy.

According to the Federation, the domestic cotton mills, which import cotton from the global market to meet their needs, get a raw deal from the LCA when disputes arise between them and the exporters.

ICMF has also asked for suitable changes in the NFTP, stipulating that cotton imports into the country be allowed only against the proposed Indian Standard Cotton Contract Form. Indian mills import over 21 lakh bales of cotton every year for processing into quality yarns and fabrics for the global market. The import of cotton into India is usually against the standard contract of LCA and subject to LCA arbitration.

According to ICMF, while cotton suppliers have found it cost-effective to take up the membership of LCA as they deal with huge transactions, the Indian cotton millers, who import only 10 per cent cotton, find it extremely expensive to take up the membership of LCA. The arbitration fee under LCA is very high for non-members.

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