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Our Bureau

Prices expected to rise as surplus stocks are depleting

PROSPECTS BRIGHT: (From right) Mr S. Roy, Joint Secretary, Ministry of Textiles, Government of India; with Mr Wallace Darneille, President, International Cotton Association Liverpool, UK; Mr Ray Butler, Managing Director, Cotlook Ltd; and Mr O.P. Agarwal, Executive Director, East India Cotton Association; at the international conference on cotton organised by East India Cotton Association in Mumbai on Thursday. - Paul Noronha

Mumbai March 15 After hitting a plateau for the last three years, the cotton economy is reviving on the back of strong growth in production as also domestic and export demand.

"Textile industry across the country is undergoing a sea change as far as technology is concerned. Over 800 units against the target of 1,000 units have modernised their operations using the Technology Upgradation Fund and the fund will be kept open for another three years. The number of spindles are likely to increase from 29 million to 58 million by 2010-11," said Mr Sudripto Roy, Joint Secretary, Ministry of Textiles.

He was addressing the International Cotton conference here today.

The Eleventh working group has projected production of 284 lakh bales (170 kg each) for 2007-08 against consumption requirement of 236 lakh bales. Despite rising output, cotton prices are expected to rise as surplus stocks are fast depleting because of buoyancy in consumption.

"In the next 10 years, India's net production and consumption of cotton would equal each other; so there are chances that India may not be in a position to export cotton. Internal demand over a period will be high and our own industry will be willing to pay a cost, which is more than export price," he said.

The Government has also set aside funds for promoting Indian cotton as a brand. Without revealing the size of the fund, Mr Roy said, "We want to promote Indian cotton in the international market as a unique brand. There is good demand for Indian cotton as the quality has much improved".

Stressing the importance of increasing yield, Mr K.F. Jhunjhunwala, President, East India Cotton Association, said, "Though the yield has gone up from 400 kg per hectare in 2003-04 to 500 kg per hectare in 2006-07, there is scope for increasing it to 716 kg per hectare by 2010. Assuming the area under cotton cultivation remains constant at around 9 million hectares, India should achieve a yield of around 850 kg a hectare and a crop of about 450 lakh bales by 2012."

Global market share

Indian textile and clothing industry has embarked on a mission to double its global market share to $110 billion by 2012. "To achieve this target, the textile industry has estimated total cotton requirement at 5.95 mt (35 million bales) by 2010 and 7.65 mt (45 million bales) by 2012," he said.

Encouraging cotton manufacturers to take advantage of futures market, commodity market regulator the Forward Markets Commission Chairman, Mr S. Sunderashan, pointed out that futures trading in cotton were rather modest and contracts were rather illiquid. "I would urge the stakeholders to utilise the platform for a better price discovery," he said.

It is the first time that an international event with large participation of overseas delegates (including nearly 60 from China) is taking place in India. The two-day conference has attracted over 400 delegates.

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